Bosses’ pay rises twelve times inflation rate

BOSSES of Britain’s 10 largest companies saw their pay packages rise by more than 12 times the rate of inflation in 2003, new research showed yesterday.

The bulk of the rises took the form of benefits other than basic salaries which rose by a more modest 3%, a survey by consultants Independent Remuneration Solutions (IRS) showed.

Salaries accounted for only 16% of total remuneration as chief executives picked up an array of rewards that included bonuses, share options and pension contributions, IRS said.

The survey focused on pay arrangements outlined in the annual reports of companies including oil giant BP, drugs group GlaxoSmithKline and global bank HSBC.

Chris Gent was the best-rewarded chief executive in 2003 with a total pay package of £10.9 million for his work at the helm of mobile phone group Vodafone.

This compared with Eric Daniels at Lloyds TSB who picked up £2m, while Jean-Pierre Garnier of Glaxo saw his salary rise restrained by the weakness in the US dollar.

Oil giant Shell was not included in the survey because it has postponed the publication of its 2003 report in the wake of two shock reserves downgrades this year. IRS said the survey of remuneration packages was important because blue-chip firms were the “bellwether of UK best practice” and set the example for other firms to follow.

But calculating the pay of chief executives remained confusing and only a few companies had improved they way they disclose details of remuneration.

Government regulations introduced in 2002 had not brought greater transparency and accountability or helped to restrain directors’ pay, the IRS said.

“It is unclear how much CEOs are actually paid. Although companies disclose each of the elements of remuneration, they spread the data over numerous pages of the Remuneration Committee report,” the IRS said.

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

The move towards more performance related pay was logical but it had not been matched by reductions in salaries, the survey found.

The IRS added that companies were increasingly adopting more than one long-term incentive plan and these had been a key driver of rises in total remuneration over the past five years.