UK firms generous on pay for directors

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The Independent Online
DIRECTORS of UK subsidiary companies received average pay rises of 7.9 per cent for the year to July - putting them in the upper reaches of the European league, according to Monks Partnership, the remuneration advisers.

British directors came fourth in the survey of nearly 1,350 companies in 16 European countries. The table was easily headed by Portugal, where base pay rose 19.1 per cent in the 12-month period. Italy and Spain came second and third, with increases of 9.6 per cent and 8.4 per cent respectively. Germany was sixth, with a rise of 7.3 per cent, while France was bottom with 5.8 per cent.

Even after allowing for inflation - about 4.3 per cent over the year - British managers stayed in the upper part of the league. Portugal retained its top spot, with a net increase of 8.4 per cent. Switzerland went to the bottom, with net pay increases of just 1.1 per cent.

Directors of UK subsidiary groups are expected to see their base pay rise about 6 per cent in the next year - in line with rises in Germany, Austria, the Republic of Ireland and Switzerland. But predictions range from 4 per cent for Sweden and Finland to 20 per cent for Greece. The high figures forecast for Greece and other countries are mainly due to high inflation.

Differences in costs of living as well as taxation and social security payments make comparisons of executive earnings across Europe difficult, Monks said in the survey, Management Remuneration in Europe. It said the situation has been exacerbated by the recent big swings in exchange rates since the study, based on standard director posts in subsidiary organisations with annual turnover of approximately pounds 30m, was carried out.

As a result, there is a great divergence in net pay. The UK is one of eight countries out of 16 where earnings are in the pounds 28,000- pounds 35,000 range. German executives receive more than pounds 40,000, while Scandinavians earn about pounds 20,000.

Benefits and other incentives are awarded almost universally in Europe. With the exception of Switzerland, 80 per cent of all directors have the use of a company car. The UK is the only country in which company car provision has declined over the last three years.

Tony Vernon-Harcourt, managing director at Monks, said: 'The move towards the homogeneity of pay, incentives and benefits amongst the senior managements of European international companies is gathering pace.'