Executive pay increase set to revive row

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The Independent Online

The pay of Britain's biggest bosses has surged by more than four times the rate of inflation according to survey out today that will reignite the row over executive pay.

The pay of Britain's biggest bosses has surged by more than four times the rate of inflation according to survey out today that will reignite the row over executive pay.

The basic salaries of the chief executives of the 100 largest companies rose by an average of 10.1 per cent. But when bonuses were included the total cash increase was 14 per cent, independent analysts Incomes Data Services (IDS) said.

Headline inflation has averaged around 3 per cent this year while pay across the whole economy is rising at 3.8 per cent a year.

The IDS survey of 2,000 directors found that directors below chief executive level and outside the FTSE 100 received equally large pay awards.

The CEO of a FTSE 250 company saw his or her salary rise 12.2 per cent or 13.9 per cent including all other benefits. The pay package of a finance director of a FTSE 100 firm rose 12.3 per cent and surged by 17.0 per cent for a FTSE 250 FD.

IDS found the average pay package for a FTSE-100 chief executive over the financial year ending in May was £884,445. It said 169 directors received total earnings of more than £1m, nearly three times as many as last year, although much of that was based on share option profits. "United States-style pay levels are beginning to become prevalent in the UK," the report said.

The highest-paid director was Colt Telecom's chief executive, Paul Chisholm, who earned nearly £15.3m. While his salary was £257,400, this was dwarfed by notional share option gains of £14.7m. Altogether another six directors received more than £5m thanks to huge incentive payments. Three directors - two at EMI and one at Granada - received a basic salary of more than £1m.

IDS said boardroom pay had continued to spiral in the absence of any clear direction from Government. Ministers issued a consultation document on executive pay last year but have yet to publish a full report on their findings.

IDS for the first time analysed pay and bonuses in the "dot.com" sector and found its directors were the worst remunerated. FTSE 100 chief executives in the sector had an average basic salary of £506,500 - more than 40 per cent lower than main stream counterparts.

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