Belfast Telegraph

Investors fume over pay hikes for bosses

By Holly Williams

Bosses of Britain's top 100 listed companies have seen their pay rise 5% to an average of £3.1m since 2008 despite a drop in key performance targets - provoking widespread shareholder anger.

Chief executive salary packages have quadrupled over the past 10 years while share prices have declined - raising concerns over links between remuneration and shareholder value, according to the Total Remuneration Survey 2010.

The study found that heads of FTSE 100 Index firms are paid more than £3m each on average, although there has been a 1% fall in earnings per share for blue chip firms over the past two years.

The report - conducted by pay consultancy MM&K and proxy voting agency Manifest, which has institutional investor clients - also discovered that short-term annual bonus incentives make up an increasing proportion of total pay rather than salaries and long-term share options.

Today's report comes as investor anger mounts over executive pay proposals, with Tesco on Friday becoming the latest to feel investor wrath.

More than a third of shareholders voted against Tesco's remuneration plans, with the group coming under fire at its annual meeting for generously rewarding the boss of its US business in spite of heavy losses.

Cliff Weight, director of MM&K, said the study discovered that incentive schemes were designed to "satisfy the chief executive and in fact offer little incentive for anything above just 'adequate' performance."

He added: "If committees want to avoid criticism at the AGM and look shareholders in the eye, they've got to change and be more diligent and challenging."

Annual bonuses make up as much as 300% of chief executive salaries in larger companies, the survey showed.

Maximum bonus levels as a proportion of their salaries are around 25% higher than in 2006, while salaries have risen 16%.

Marks & Spencer may suffer a investor backlash over pay later this month. Two institutional shareholders are reportedly planning to vote against the remuneration report in protest at the multi-million pay deal for new chief executive Marc Bolland.