Directors under fire over 55% pay rises

Directors of FTSE 100 companies saw their total earnings soar an average of 55 per cent during the past year, prompting fresh calls from politicians for executive pay restraint.

The findings from Incomes Data Services, the pay monitoring group, follow Vince Cable’s move this week to consult on greater transparency on how managers are rewarded.

Mr Cable said the survey was proof that executive pay needed to “come back down to earth”. The business secretary added: “We have to question whether it is linked closely enough to company performance.”“I’m determined to take a really close look at these important issues and want to see a wide response from industry to my review.”

The figures appear to underline the limited effect of recent calls for pay restraint by politicians of all parties.

The average FTSE 100 chief executive took home £4.9m in total earnings in the year to June, according to IDS.

That is 88 times the average pay of full-time workers – down slightly from a peak of 94 in 2008, but sharply up on 10 years ago, when corporate chiefs earned 47 times the average.

Basic salary grew only 3.6 per cent for FTSE 100 chiefs last year, but their pay packages were boosted by a resurgence in bonus payments, share option gains and long-term incentive plans. Across the FTSE 350, total boardroom pay went up an average 45 per cent.

Bart Becht of Reckitt Benckiser was the highest paid top executive in the FTSE 350

The Institute of Directors said the survey ignored the wider picture. “We believe the majority of directors across the private sector have received a pay cut in real terms this year,” it said. “The FTSE 100 is not representative of the whole private sector.”

Kelvin Hopkins, a leftwing Labour backbencher, said the pay packages were a “moral outrage”, but he was “no longer surprised by the excesses of financial capitalism”.

Derek Simpson, joint general secretary of the Unite union, said ordinary workers would be angry about the news given the pay freezes and redundancies of recent months. “It shows that David Cameron’s phrase ‘we’re all in it together’ is pretty shallow,” he said. “It is grotesquely unfair ... when our members have only seen a rise of about 2 per cent this year.”

Top of the tree across the FTSE 350 was Reckitt Benckiser’s Bart Becht, who took home £92.6m, most of it from crystallising share options accumulated over a decade.

After him came top executives at Berkeley Group, the builder (£38.4m), Xstrata, the miner (£27m), and BG Group, the oil and gas company (£23.5m).

IDS said shareholders were likely to ask whether companies’ performance justified the “business as usual” approach to bonuses after such a short period of restraint.

While the FTSE 100 index rose 14.5 per cent in value over the year, bonuses were up more than a third, share option gains more than 90 per cent and long-term incentive plans more than 70 per cent.

Top of the tree: total earnings of lead executives
Reckitt Benckiser: £92,596,160 FTSE ranking 19. Berkeley: £38,428,724 FTSE ranking 178. Xstrata: £26,953,936 FTSE ranking 14. BG: £23,510,907 FTSE ranking 12. Tesco £17,934,000 FTSE ranking 16. ICAP: £14,928,934 FTSE ranking 92.