Revealed: Average pay package of a FTSE 100 chief rises to £1.73m

As angry shareholders vote against massive payout for Glaxo chief executive...

The average pay and pension deal of the leaders of Britain's 100 largest companies rose last year to £1.73m, while the stock market fell by a quarter, an Independent survey reveals today. Average pay, before pension benefits, was up by nine per cent - almost three times the rate of inflation.

The definitive study of executive remuneration compares boardroom pay with company performance. It reveals that, in many British companies, many executives are seeing their rewards rocket as share returns plummet. It will fuel the ongoing controversy over executive rewards for failure.

The investigation is published as Jean-Pierre Garnier, chief executive of GlaxoSmithKline, fell victim last night to the most severe shareholder rebellion against fat-cat pay in British corporate history. Investors voted down his lavish remuneration package by a wafer-thin margin at the company's annual meeting.

The vote was hugely embarrassing for Mr Garnier. It marks the most serious warning sign that shareholders, who for the first time have the right to vote on directors' pay, have lost patience with companies that are giving excessive rewards to senior executives.

At a packed annual shareholder meeting, 50.7 per cent of Glaxo's shareholders voted against Mr Garnier's "golden parachute" package, which would see him walk off with £15m to £23m if he were fired. It has been singled out for particular criticism because his package is thought to be unrelated to his performance at the helm of the drugs giant. Shares have fallen by a third since he took over in late 2000, when Glaxo and SmithKline merged. Mr Garnier comes in at number six in our list of fat cats.

Although the vote is merely advisory, Europe's largest drugs maker indicated that it would reduce Mr Garnier's lavish package but maintained that it would have to remain "competitive" with what he could expect to receive in the US. But that may not be enough to save the chairman, Sir Christopher Hogg. A boardroom reshuffle is expected later this year and he may be forced to resign.

The controversial size of executive payouts, which often bear no link to performance, is highlighted in The Independent's study. For every member of the FTSE 100, it compares the remuneration of either the chairman or the chief executive - whichever was paid more - to the returns generated for shareholders in that company over a three-year period.

Sir Peter Bonfield, former chief executive of BT, tops The Independent's survey of executive pay versus shareholder return, despite a collapse in the company's share price. Sir Peter left BT after seeing his strategy unravel and the telecoms giant left with £30bn in debt. His compensation for stepping down was a pay-off worth nearly £3m. In contrast, investors have seen their returns slump more than 70 per cent in three years

The investigation shows that Lord Browne of Madingley, BP's chief executive, is Britain's most generously rewarded captain of industry. He collected £4.9m from the oil giant last year in pay, bonuses, and money to fund his pension. BP has seen its shareholder return - the value of shares and dividends - fall by nearly a quarter in the past three years.

The Independent lists the directors who have proved the worst value for money. The fat-cat ranking is based upon remuneration - including pay, annual bonuses and pension benefits but excluding most share options - related to how badly shareholders have fared over the past three years. The methodology is spelled out in today's Review. Politicians last night backed The Independent's survey. Martin O'Neill, chairman of the Commons Trade and Industry Select Committee, said: "It is indecent for people to reward themselves as they are tending to do."

Vince Cable, the Liberal Democrat spokesman on Trade and Industry, said: "What is outrageous is that it has coincided with poor performance. It is completely unacceptable that executives are awarding themselves such salaries. It's not only unfair but massively demotivating for employees who are badly paid, suffer insecurity and who are losing their pension entitlements."

Keith Barron, Labour MP for Rother Valley, said: "The pay rises are outrageous and insensitive to the vast majority of people. It is shameless for heads of failing companies to cream off this sort of money."

Despite the gathering outcry, Patricia Hewitt, the Trade and Industry Secretary, is thought to have ruled out legislation to curb excessive pay-offs. The Government is likely to rely instead on voluntary restraint.

1 SIR PETER BONFIELD BT
Total remuneration £3.1m Shareholder 3-year return -71.4%

2 SIR CHRISTOPHER GENT VODAFONE
Total remuneration £3.78m Shareholder return -54.5%

3 JOHN WESTON BAE SYSTEMS
Total remuneration £2.52m Shareholder return -63.2%

4 IAN HARLEY ABBEY NATIONAL
Total remuneration £3.53m Shareholder return -31.3%

5 LORD BROWNE BP
Total remuneration £4.9m Shareholder return -23.8%

6 JEAN-PIERRE GARNIER GSK
Total remuneration £3.06m Shareholder return -27.5%

7 SIR PHILIP WATTS SHELL
Total remuneration £2.97m Shareholder return -21.2%

8 CHARLES BRADY AMVESCAP
Total remuneration £2.18m Shareholder return -56%

9 TONY BALL BSKYB
Total remuneration £2.05m Shareholder return -48.1%

10 TOM GLOCER REUTERS
Total remuneration £1.88m Shareholder return -84.7%