UK top pay continues to escalate

Median base salaries rose by 9.3%, and total earnings - base salary plus any annual bonus - increased by 11.7%, according to Monks's analysis of 70 executives at FTSE 100 companies who held the same position during the year reported in the 2001 and 2002 annual reports.

The increase is about five times the level of inflation and three times the average pay increases in the general workforce, and add fuel to the row over "fat cat" salaries. A poll of the public conducted by the Trades Union Congress (TUC) earlier this year found that three out of four people agree that directors should receive pay rises at a similar rate to the rest of a company's staff.

John Monks, TUC General Secretary, says: "At a time when corporate confidence is so low, this kind of executive excess is even more disappointing. It is becoming clear to staff that 'there's one rule for us and one rule for them'."

David Atkins of the Monks Partnership, part of Pricewaterhouse-Coopers, denies that the survey provides evidence that executive pay is spiralling uncontrollably. He says the analysis "provides ammunition for those who say executive pay is reasonably under control.

"We're looking at the largest companies in the UK, and probably the most successful, because if you're not successful, you'll soon drop out of the FTSE 100."

Atkins notes that, in any one year, only around 70% of the FTSE 100 have a full-time chairman or chief executive who has been in the post for more than 12 months. He says: "There's quite a lot of movement at the top. The pay can be for quite a short time."

Over the past 12 months, the base salary of a typical chief executive has risen to an average of 574,000 (€898,000), and the typical bonus is 46.5% of salary. Median total earnings for a FTSE 100 chief executive stand at 869,000 (€1.36m).

In the upper quartile of companies surveyed by Monks, pay increases were substantially higher. Base salaries rose by more than a quarter, and total earnings by more than a third at these companies.

The best paid executives are in the media, retailing and insurance sectors; utilities and engineering and construction are the least well-remunerated sectors.

The rate of growth has slowed during the past year. The median increases in base salary and total earnings were lower than the 2001 increases of 15% and 17%, respectively. Moreover, according to Monks, 16% of chief executives did not receive a bonus payment.

Monks's figures do not include payments from option schemes or other long-term incentive schemes. But the survey notes that more than 60 FTSE 100 companies operate two long-term plans, typically one share option plan and another long-term incentive scheme.