Page last updated at 16:06 GMT, Tuesday, 14 July 2009 17:06 UK

BBC chiefs' bonuses are suspended

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Bonuses scrapped for BBC executives

Bonuses for the 10 most senior BBC executives are to be suspended indefinitely, the chairman of the BBC Trust has announced.

Sir Michael Lyons said their pay was still regarded as "generous" despite a 7% fall, and a review was under way.

As the BBC's annual report was unveiled, Sir Michael also responded to criticism from culture secretary Ben Bradshaw about sharing the licence fee.

Sir Michael maintained plans were "a threat to the independence of the BBC".

BBC EXECUTIVE SALARIES 2008/9
Mark Thompson - Director General £834,000
Jana Bennett - Director, Vision £515,000
Mark Byford - Deputy Director General £485,000
John Smith - Director, BBC Worldwide £480,000
Zarin Patel - Chief financial officer £429,000
Source: BBC annual report 2008/9

The total pay of the BBC's 10 executive directors fell from £4.96m in 2007/2008 to £4.6m in 2008/2009.

The falls hide a 2% pay rise, largely because no bonuses were taken last year.

Now, any bonus payments for executive directors have been "suspended until further notice and not reintroduced without the trust's approval".

That move forms part of a review of executive pay - revealed by Sir Michael on Tuesday - which began in February.

"There has been considerable disquiet in recent weeks about the salaries of top BBC staff," he said, referring to the disclosure of executive pay packets last month, which revealed that 27 senior staff earned more than £195,000 last year.

"I can clearly understand why hard-pressed licence fee payers may feel that the pay of some top executives and staff is generous."

Licence fee pie chart

The review would balance the need "to pay enough to get the best people" with "the BBC's own financial challenges," Sir Michael added.

Those challenges to funding include government proposals to allocate 3.5% of the licence fee to other broadcasters, including ITV, to fund the provision of regional news and children's programming.

Speaking to the Financial Times, Mr Bradshaw said it was "self-defeating" of BBC managers to oppose the plans.

They had lost the confidence of many of their senior staff over the issue, he added.

"There is almost a feeling of despair among a lot of highly-respected BBC professionals," he said.

BBC ANNUAL REPORT
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"I don't know why they have adopted this position. I don't think it's sensible. I think it is wrong-headed and ultimately self-defeating."

But Sir Michael told Tuesday's press conference it was "surprising that a secretary of state who has just started a public consultation exercise should give the impression that he has already made his mind up so firmly".

He added: "You run the risk of the licence fee becoming a back pocket for government, used to fund an increasing range of activities with damage to accountability, eventually the independence of the BBC, and run the risk of a higher licence fee in the future."

And director general Mark Thompson said there was "no disunity" over the issue.

Resistance to such "top-slicing" was "incredibly strong across the organisation", he added.

Speaking to BBC Radio 5 Live later, Mr Bradshaw said he did not "want to have a spat with the BBC about this".

The government had come up with the plan because "there is a serious real question mark over whether ITV can continue to provide regional news", he added.

Mark Thompson on the decision to suspend bonuses for executives

"We have made quite clear in the consultation document that we are open to other ideas."

The annual report revealed that Mr Thompson was the only executive director whose total pay went up - by 2% from £816,000 to £834,000 in 2008/2009.

But he said that was because he was the only one not to have taken a bonus in 2007/2008.

The pay of Sir Michael also increased from £163,000 in 2007/2008 to £213,000 last year.

But Sir Michael said he had only taken up his position in May 2007 - so his fees for the 2007/08 did not cover the full year.

The job had become more time consuming in 2008/2009, he added.

Star Salaries

Also published on Tuesday was a follow-up to the BBC Trust's June 2008 report into stars' salaries.

Joanthan Ross
Jonathan Ross is among the BBC's top earners

In the follow-up review, the trust recommended that, while progress had been made towards getting "a tighter grip and control on salaries", the BBC should focus on reducing the pay of the celebrities who earned the most.

The corporation does not publish the salaries of individual stars, saying it hinders its ability to attract top talent.

But Sir Michael and Mr Thompson agreed that, in the future, the BBC would publish figures showing "how costs are distributed from those at the very top of the scale".

The annual report showed that licence fee evasion was up from 5.1% to 5.3% which, the BBC said, reflected "current economic conditions".

The BBC Trust publication gives licence fee payers a chance to examine the corporation's activities.

Meanwhile, it was also announced on Tuesday that the annual revenue of the corporation's commercial arm, BBC Worldwide, had topped £1bn for the first time.



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