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Wednesday, 29 August, 2001, 11:56 GMT 12:56 UK
Executive pay rises 28%
Britain's top directors received an average pay rise of 28% last year - more than five times higher than the rise in the UK's average wage.

That is the conclusion of a review of executive pay carried out for the Guardian newspaper by compensation consultants Inbucon.

Highest paid chief executives
Martin Read (Logica) 27.3m
Sir Chris Gent (Vodafone) 9.7m
Peter Fellner (Celltech) 7.5m
Paul Chisholm (Colt Telecom) 6.5m
Source: Inbucon survey

The figures were calculated from the annual reports of all the FTSE 100 companies, and include income from bonuses and share options as well as basic pay.

According to the report, the UK's highest paid director is the chief executive of technology company Logica, Martin Read, who earned 27m.

Meanwhile Vodafone's chief executive Sir Christopher Gent received the biggest year-on-year pay rise, of 400% - taking home over 9m.

Bonus schemes pay off

Overall the survey found that more than 140 executives at FTSE 100 companies took home at least 1m last year.

With the economic situation looking a bit bleaker I'd be very very surprised if these increases did continue

Ruth Lea, Institute of Directors

The Guardian says most of the highest paid executives made most of their money through performance related schemes such as share options, despite the fact that many companies are now preparing for an economic downturn.

Removing the effect of bonus schemes and long-term incentive plans, the survey found that base salaries rose by an average of 22%.

Latest government figures showed average pay rises across the whole economy of 4.8% in June, while in the year to December 2000 the average rise was 5%.

Worker representation

The head of the TUC John Monks said the findings showed the need for worker representatives on committees that decide executive pay.

He said the research showed "fat cat" pay levels showed no sign of ending.

"That's why we want the government to ensure remuneration committees have employee representation and to compel companies to justify pay packages to their AGMs [annual general meetings] including allowing for a separate vote on pay," he said.

'Winner takes all'

Speaking on BBC Radio 4's Today programme the head of policy at the Institute of Directors Ruth Lea said there was "no doubt" that some FTSE 100 directors were taking much bigger pay rises than not only employees but the majority of company directors.

She said surveys of the Insititute's members - who mostly work in small or medium-sized companies - found their pay rises were nearer 4%.

"You have a sort of 'winner takes all' culture where the top directors are pulling massively away from the other directors," she said.

This was partly due to market forces with a shortage of top people available and the cost of recruiting executives from overseas.

But she said the current economic slowdown could trim back pay.

"With the economic situation looking a bit bleaker I'd be very very surprised if these increases did continue," she said.

Ruth Lea, Institute of Directors
"You have a winner takes it all culture"
See also:

20 Jul 01 | Business
Fat cat furore hits Boots and C&W
30 Jul 01 | Business
UK bosses best paid in Europe
08 Mar 01 | Business
Labour targets 'fat cat' pay
10 Sep 00 | Business
TUC demands 'fat cat' pay action
27 Apr 01 | Business
Are big bonuses justified?
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