Rusal hands Deripaska $70m despite trailing share price

Oligarch nets huge bonus in middle of executive pay controversy

Oleg Deripaska, the chief executive of the Russian aluminium giant Rusal, is to pocket an eye-watering $70.3m (£45.5m) bonus for the flotation of the company, despite the worldwide backlash against exorbitant executive pay and the fact that the group's share price is still under water.

As a reward for Rusal's flotation in Hong Kong in January, Mr Deripaska will receive 50.6 million bonus shares at the initial public offering price of HK$10.80 each. The shares are still under water – trading at less than the opening price – despite a 10 per cent increase in the Hang Seng index.

Other Rusal executives are to be given another $14m bonus between them – 60 per cent of which will be in the form of shares.

The oligarch's bonus comes in addition to his $10m basic salary, which dwarfs that of many of his rivals. BHP Billiton, the world's biggest miner, paid its chief executive, Marius Kloppers, $10.4m last year, including his $2m basic salary. Tom Albanese at Rio Tinto took home £3.8m on a basic of £900,000.

Mr Deripaska's gargantuan bonus comes amid increasing criticism of the excessive pay enjoyed by executives. In Britain, the most obvious target has been the banks. The furore over state-owned Royal Bank of Scotland's £1.3bn bonus payouts was hardly ameliorated by its chief executive, Stephen Hester, waiving his £1.6m pot. The Lloyds chief executive, Eric Daniels, also passed up the £2.3m bonus he was due. Across the sector, the Treasury's one-off 50 per cent tax on bonuses raked in £2bn, far higher than the £550m expected.

Bankers are not the only "fat cats" to come in for a public drubbing. Last month, the director-general of the Confederation of British Industry, Richard Lambert, warned that all business leaders risked being regarded as "aliens... in a different galaxy from the rest of the community".

Britain's FTSE 100 chief executives earned 81 times the average wage in 2009, up from 47 times in 2000. Mr Lambert said this risked damaging public support for business, adding: "It is difficult to persuade the public that profits are no more than the necessary lifeblood of a successful business if they see a small cohort at the top reaping such large rewards."

Despite his remarks, this month has seen a stream of big bonuses for bosses, including $7.7m for Mick Davis, the chief executive of Xstrata, £28m for BG Group's Frank Chapman, and a record-breaking £90m for Bart Becht at Reckitt Benckiser.

Even the public sector is not safe. A report from Income Data Services last month confirmed that senior managers at English NHS trusts saw pay rises pushing 7 per cent, while nurses were making do on less than 3 per cent.

The commonest riposte is that corporations – be they banks or hospital trusts – must pay the market rate. Earlier this month, Morrisons hiked its pay deals for executives after the supermarket group's chief executive, Marc Bolland, was poached by Marks & Spencer with a £15m package. Paul Manduca, the chairman of the renumeration committee, said that recruiting a new chief executive had shown how important competitive pay deals were.

Nor is Britain the only country where recession has turned a spotlight on remuneration. In the US, a pay tsar, Kenneth Feinberg, was appointed last June specifically to oversee the compensation of executives at companies bailed out by the government. Last month, he ruled that the top 25 earners at five companies still receiving a large amount of federal aid would be paid an average of 15 per cent less this year than last. Cash salaries will be capped at $500,000. The rest of their compensation must come in stock, in an effort to link pay with performance. AIG, in particular, has clashed several times with Mr Feinberg, most recently in November when he ruled that the salaries of two of the group's leading executives must be reduced.

Unlike in Britain, US corporations are not required to put remuneration policies to a shareholder vote. But the Securities and Exchange Commission is increasingly encouraging full disclosure, and there is growing ad hoc pressure for shareholder sign-off, boosted by a campaign called Executive PayWatch by the American Federation of Labor union to encourage investors to have their "say on pay".

In Asia, however, executive pay is far less of an issue, partly because Asian bosses are paid less than their Western colleagues. Japanese chief executives take home an average of $1.5m a year, compared with $13.3m in the US and $6.6m in Europe. But some critics say Japanese bosses would perform better with stock options that left them with more to lose.

81

Multiple of FTSE 100 chief executives' pay over UK average, up from 47 in 2000.

Suggested Topics
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?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones