Chief executives of FTSE 100 companies received a massive 15 per cent pay
rise last year, according to research by PricewaterhouseCoopers.
It shows that the salary of the typical chief executive or full-time
chairman reached £539,000. Average remuneration rises to £781,000 when the
average bonus of 40 per cent is included.
The increase in median base pay is almost double the 8 per cent rise in
Report author David Atkins believes that the jump in salary is due to a
change in the type of company in the FTSE 100.
He said, "This year’s report contains only 80 of the companies which
were in our 2000 analysis. Almost all the new economy companies have left the
FTSE 100, to be replaced by old-economy companies such as Associated British
Foods, Hanson, Safeway and Wm Morrison Supermarkets."
Atkins said the large number of mergers and acquisitions over the past year
– BP and Amoco, CGU and Norwich Union, Glaxo Wellcome and SmithKline Beecham
and Vodafone and Mannesmann – helped boost chief execs’ pay.
He said, "It is not surprising that base salary increases to chief
executives are in double digits, reflecting the increased size of some companies
and the shortage of individuals with skill and experience to manage businesses
that increasingly are global."
Chief executive pay varies widely according to sector. In the consumer goods
sector their median total earnings is more than £1m, but in utilities it is
Executive directors’ salaries rose by only 2 per cent. With the exception of
telecoms, the largest increases went to those in low-pay sectors, such as
utilities, engineering and construction.
By Paul Nelson