Chief executives' pay rises by more than 30 per cent

The chief executives of the country's largest public companies saw their pay rise by more than a third last year, far faster than most wages across the nat-ion, according to a report.

The CEOs of Britain's 30 richest companies – those with a market value of more than £10bn – received pay rises of 33 per cent, at the same time as increasing numbers of British people struggle to cope with the effects of the credit crunch.

The survey, which provides an insight into the true earnings of Britain's high-powered executives, was carried out by the remuneration consultancy MM&K and the proxy voting agency Manifest, and took into account performance-related bonuses and rewards as well as salaries. It found that the average pay of many top executives had risen to a staggering £5m, and had climbed at 10 times the level of inflation in the course of a year.

The report also said that top directors "did significantly better than shareholders and employees", revealing that CEOs working for the biggest businesses earned around 60 per cent more than the second highest earning director at their establishment.

Those who worked for smaller companies also received pay rises but these were far more modest. In 2007, the average CEO of a FTSE 100 company enjoyed a salary of £755,000 and an annual bonus of £828,000. The same people were also awarded "long-term incentives" – money based on their performance over a three- to five-year period – with an estimated value of £1.6m. This would suggest that as the effects of the credit crunch are felt around the country, more top companies have started to favour incentive-based rewards over swollen salaries.

The report concluded: "In terms of pay, size matters. Bigger companies have bigger salaries, bigger bon-uses, much bigger long-term incentives and bigger pensions. Added together, this gives them much bigger total remuneration."

The pay increases, which appear to be a desperate attempt by some companies to convince their top executives to remain in their jobs during a time of economic uncertainty, are not expected to continue forever. Nigel Mills, a director at MM&K, admitted that if a similar report was published next year it would paint a very different picture.

"A lot of these big awards would have been made during 2007 when the signs of economic downturn were not fully evident," he said. "But those that were made towards the end of the year might have been at a time when the share prices of these companies had already started to drop off.

"It's partly in connection with what's happening in the United States, but it's also about providing incentives to the executives to drive the businesses forward. I can't believe it can go on, and the evidence seems to be suggesting that in this current year [the companies] are not managing to push through any further increases."

According to the survey, the highest earning executive in 2007 was Bart Becht of the cleaning and healthcare company Reckitt Ben-ckiser. Although his £912,000 salary was not the highest – Jeroen van der Veer of Royal Dutch Shell took home £1.3m – he received a cash bonus of more than £3.2m and a £271,000 pension. A spokeswoman for Reckitt Benckiser said: "It's all about pay for results and the results have been stunning. Our CEO is paid for his performance, and this business has constantly delivered good results to the benefit of our shareholders."

* The Royal Mail, under attack for closing 2,500 post offices, has been accused of rewarding its bosses for "failure" after it was revealed chief executive, Adam Crozier, received more than £3m in pay, pensions and incentives in the last financial year.

The best-paid CEOs

*Bart Becht, Reckitt Benckiser: £22,357,500

Born and raised in the Netherlands, Becht has converted his company into one of the most successful manufacturers of cleaning products. With an MBA from the University of Chicago, he made swift progress through Procter & Gamble before joining Benckiser in 1988. Oversaw the acquisition of Boots Healthcare International for £1.9bn in 2006.

*Michael Davis, Xstrata: £16,113,022

Better known as Mick, the 50-year-old worked for several years in the utilities industry in South Africa, before progressing to BHP Billiton, the mining giant. Xstrata was a relatively little known Swiss mining company when Davis joined as chief executive, but a £1.8bn deal to buy coal mines in South Africa took him into the big-time.

*Mike Turner, BAE Systems: £9,035,980

A young manager of the year award from the British Institute of Management in 1973 signalled early promise. He has spent nearly four decades working in the aeronautical industry, much of it overseeing British Aerospace's Military Aircraft Division, and took up his current post in March 2002. He was awarded a CBE in 1999.

*Frederick Goodwin, Royal Bank of Scotland: £8,852,818

Born in Paisley and educated at Paisley Grammar School, Goodwin was a chartered accountant with Touche Ross before taking a role at BCCI in 1990. Nicknamed Fred the Shred because of his penchant for efficiency savings, he joined RBS as deputy CEO in 1998 and rose to CEO three years later.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Recruitment Genius: Experienced Financial Advisers and Paraplanners

Negotiable: Recruitment Genius: This extremely successful and well-established...

Day In a Page

Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map