Business chiefs 'get the cream'

IRS: "CEOs are getting bread, butter, jam and cream."

Basic pay for chief executives at the UK's largest firms may have risen only3% in the past year but their total pay deals have soared, a study has said.

Independent Remuneration Solutions (IRS) found pay packages for bosses jumped 24% last year.

The consultancy examined the latest annual reports of nine of the 10 largest companies in the FTSE index.

It found that firms were moving toward performance-related pay, but there had been no corresponding cut in basic pay.

IRS found that basic salaries made up, on average, just 16% of the total pay of top business leaders last year - up from 15% last year.

By examining the companies' accounts for 2003 it found that the average payout for each company chief was £5.4m.

'Bread, butter, jam and cream'

Vodafone's Sir Christopher Gent - who retired last year - led the way with a total pay package of £10.9m, while Eric Daniels of Lloyds TSB picked up the smallest pay deal of £2m.

COMPANIES USED IN IRS STUDY BP Vodafone GlaxoSmithKline AstraZeneca HSBC HBOS Barclays Royal Bank of Scotland Lloyds TSB

IRS made its calculations by totting up clearly listed items such as basic pay, benefits and annual bonus, and added "hidden figures" such as the value of a boss's pension pot, their shares and share options.

The consultancy found that, on average, when these "hidden items" were included the total pay package was 2.7 times larger than before.

The report's author and IRS director, Cliff Weight, said: "CEOs are getting bread, butter, jam and cream."

However, some of the companies surveyed have questioned the analysis.

They say that the study's figures are distorted as many long-term share awards are never collected because of underperformance.

Lloyds TSB was one such firm. The bank said that Mr Daniels was paid £1.06m last year that he could "get his hands on" - unlike his pension and share savings.

The group also said that Mr Daniel's performance-related pay was actually 16% down on last year, because of the group's "very stringent" guidelines.

New rules

The IRS said the report was important as UK blue-chip firms are the "bellwether of UK best practice", setting an example for other UK firms to follow.

It added that new measures brought in following the furore over "fat cat bosses" had not brought greater transparency and accountability or restrained director pay.

The group added: "It is unclear how much CEOs are paid."

It said that although firms do reveal each aspect of a chief executive's pay agreement, they are spread over numerous pages of their reports.

"Some do not include the expected value of long-term incentives and none state the total remuneration."

IRS said its survey was unable to include Shell - one of the 10 biggest FTSE 100 companies - as the firm had delayed its results following the surprise downgrading of its reserves.