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Last Updated: Friday, 7 July 2006, 23:30 GMT 00:30 UK
Analysis: Pay at the top of the BBC
By Nick Higham
BBC News correspondent

BBC director-general Mark Thompson
Director-general Mark Thompson's basic salary rose by almost 9%

The BBC's annual report reveals its executives have been awarded significant pay increases.

How are these rises justified when the BBC's share of the television audience is falling?

At first sight, the pay increases awarded to the BBC's top brass are staggering, at a time when the majority of the corporation's staff have been offered an annual pay rise of just 2.6%.

The director-general, Mark Thompson, saw his basic salary go up by almost 9% from 560,000 a year when he joined from Channel 4 in 2004 to 609,000 last year.

His deputy, Mark Byford, enjoyed a basic salary increase of almost 15% to 403,000. The director of television, Jana Bennett, saw her basic go up by 25% to 321,000.

But on closer examination, things turn out not to be so simple. A year ago members of the corporation's executive board agreed to a trade off - higher basic salaries in return for smaller bonuses, capped at a maximum of 10% of basic pay rather than 30% as in the past.

In previous years it was the large bonuses taken home by some top managers which provoked negative headlines in the newspapers.

The bonuses, the BBC says now, were first introduced at a time when performance-related pay was fashionable: it no longer is.

Market rate

But the BBC still wants to pay its senior executives what it considers the market rate.

The upshot of all this is a rather mixed and slightly confusing picture.

It is about time that the BBC was made accountable to the licence paying public
Carl Thomson, Stoke on Trent

Mark Thompson - sensitive to the bad publicity in the past - decided to waive his bonus last year, as he had the year before. So his total take home pay was almost identical to his basic salary: 619,000, if you include 10,000-worth of expenses.

His deputy's total take home pay actually fell fractionally, from 457,000 to 456,000, thanks to a smaller bonus.

Jana Bennett's total pay still increased, but by a more modest 5.5% to 353,000.

'Combined duty'

Michael Grade, the BBC's chairman, says an independent review two years ago established that executives' basic pay had fallen around 15% below the "market median" - and he says it had fallen a long way behind the rest of the BBC as well when it came to matching what the wider broadcasting industry pays.

Now Mr Grade says executives' basic pay is around 4.5% above that market median - but that total pay and benefits are 15% below the median.

"The Governors believe the BBC's executive pay policy now properly reflects our combined duty to licence fee payers and our responsibility as employers," he said.

The corporation's press office helpfully compares Mark Thompson's 619,000 with the total pay packets of some of his opposite numbers in television.

The chief executive of Channel 4 (Mr Thompson's old job) got 686,000 last year. ITV's chief executive, Charles Allen, took home 1.8m. Even the boss of Ulster Television, a broadcasting tiddler, enjoyed pay and benefits totalling 568,000.

Massive cuts

But none of that is likely to satisfy the unions representing BBC staff.

They have been offered a BBC-wide pay increase of 2.6% this year, and the corporation is part-way through a massive programme of cuts which will see more than 3,000 jobs axed to achieve cost savings (though at a cost in redundancy payments of more than 240m).

Some 1,132 posts were closed last year, according to the BBC's annual report, another 2,000 are due to go this year.

Gerry Morrissey, assistant general secretary at the broadcasting union Bectu, called the BBC's senior management team "arrogant" for awarding themselves such high increases.

His union colleague Luke Crawley said the announcement made it more likely that BBC staff would vote for strike action over their pay and their pensions - the BBC is closing its final salary pension scheme to new members and increasing the retirement age.

Paul McLaughlin of the National Union of Journalists borrowed a phrase Mark Thompson himself first used to attack the BBC when he was boss of Channel 4, and accused executives of washing in a "jacuzzi of cash".

Audience share

And it does not help that an unkind headline writer might sum up the message of the annual report as "salaries up, audiences down".

The BBC's share of all television viewing fell last year from just over 36% to just under 35%, largely thanks to the growing numbers of people with digital television, who have many more channels to watch.

On the other hand there was some good news from BBC radio - whose audience share went up.

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