Cover feature - FTSE's finance fat cats

There are now 41 FTSE 100 FD millionaires, our latest annual survey reveals. Liz Fisher finds that large salaries and substantial performance-related bonuses are par for the course.

An astonishing 41 of the 96 FTSE 100 finance directors in this year's survey received more than £1m in remuneration. This compares with 34 (from a total sample of 97) in last year's survey.

Much of the increase is once again due to large performance-related bonuses. The base salaries of the FDs have risen to an average of £419,000 over the year, representing a rise of 9%. Total remuneration, though, increased by 20% to an average of £1,031,000.

Some of the increase in total remuneration can be explained by gains from stock options due to the rising FTSE 100 share index. The base salary of the FDs in the survey represents only 40% of their total remuneration, with almost all receiving substantial performance-related bonuses in various forms.

According to the latest survey of annual and long-term incentives carried out by PricewaterhouseCoopers Monks, more companies are offering annual bonus plans to their executives that are based on non-financial measures. The number of FTSE 100 companies offering bonus plans based on purely financial measures fell in the year to July 2007 from 33% to 17%. Over the same period, the number of companies basing their incentive schemes on non-financial measures such as customer satisfaction and employee engagement rose from 13% to 31%.

FDs and their institutes

Note: This table reflects current FDs. Prior year survey figures in brackets

Average remuneration of FTSE 100 FDs

Source: Accountancy annual survey.Year is year of survey

Reflecting responsibility?

Some remuneration analysts believe that the increases in remuneration in recent years reflect the greater level of responsibility faced by finance directors of large organisations.

A survey by Watson Wyatt at the end of 2006 found that the average rise in overall salary for FTSE 100 finance directors had outstripped that received by chief executives for the first time. Watson Wyatt speculated that the increase reflected the greater demands placed on FDs by the Sarbanes-Oxley Act and other regulations, as well as an increase in demand for FDs from private equity companies.

There is no doubt that the FD role with a major company is both demanding and precarious. Take, for example, the case of Jim Smart, the former chief financial officer of Boots. Smart left the company on its merger with Alliance UniChem in 2005 and was named CFO of Friends Provident in November 2006. Barely eight months later, though, he could be out of a job once more thanks to the recently proposed merger with Resolution.

But while the position may be precarious, leavers are often handsomely compensated. On his retirement from ITV in March 2006, for example, Henry Staunton received a year's basic salary (£595,000), a cash bonus of £215,000 and nil-cost options over an equal amount in shares, a further cash bonus of £287,000 and pension contributions of £270,000.

The phenomenal rise in executive remuneration over recent years has already attracted a great deal of comment and criticism and these results are unlikely to quell the debate. It has to be said, though, that the companies sometimes fail to help their cause by presenting unnecessarily lengthy and often confusing remuneration reports.

The presentation of bonus payments, for example, varies widely from company to company. A handful of companies present a single figure that encompasses all bonus payments from cash and share-based incentive plans. Others, however, separate payments into cash bonus payments, long-term schemes, short-term schemes, deferred payments and various share-matching plans, with various 'sub-totals' in between. A bonus, surely, is a bonus.

  Finance director Institute Age Salary Bonus Total remuneration Remuneration last year Years in post Year end
        (£000s) (£000s) (£000s) (£000s)    
3i Group Simon Ball ICAEW 47 455 450 1,252 1,134 2 31.03.07
Alliance & Leicester David Bennett   44 374 424 799 684 7 31.12.06
Anglo American Rene Medori   49 485 370 955 480 2 31.12.06
Antofagasta none                
Associated British Foods John Bason ICAEW 49 472 251 747 670 8 16.09.06
AstraZeneca* Jonathan Symonds ICAEW 47 598 378 1,176 1,269 10 31.12.06
Aviva Andrew Moss ICAEW 48 533 744 1,588 1,079 3 31.12.06
BAE Systems George Rose CIMA 54 530 519 1,076 1,022 9 31.12.06
BG Group Ashley Almanza CA (SA) 44 545 540 1,087 966 5 31.12.06
BHP Billiton* Alex Vanselow   43 93 72 370 n/a 1 30.06.06
BP* Byron Grote   58 483 260 743 1,085 5 31.12.06
BT Group Hanif Lalani CIMA 45 450 444 1,068 759 2 31.03.07
Barclays1 Naguib Kheraj   43 650 1,750 2,565 1,451 3 31.12.06
Barratt Developments2 Mark Pain   45 100 132 261 n/a <1 30.06.06
British Airways Keith Williams ICAEW 51 382   396 261 1 31.03.07
British American Tobacco Paul Rayner ICAEW 53 609 897 1,738 1,444 5 31.12.06
British Energy Group Stephen Billingham   49 384   400 921 3 31.03.07
British Land Co Graham Roberts ICAEW 49 362 250 641 590 5 31.03.07
British Sky Broadcasting Jeremy Darroch ICAEW 45 500 760 1,285 1,325 3 30.06.06
Cable & Wireless Tony Rice CIPFA 54 600 600 1,377 96 1 31.03.07
Cadbury Schweppes Ken Hanna ICAEW 54 560 592 1,344 1,378 3 31.12.06
Capita Group Gordon Hurst ICAEW 45 207 340 563 535 11 31.12.06
Carnival3 Gerry Cahill CPA 54 n/a n/a n/a n/a 3 30.11.06
Centrica4 Phil Bentley CIMA 48 533 566 1,136 932 7 31.12.06
Compass Group Andrew Martin ICAEW 47 461 606 1,229 472 3 30.09.06
DSG International Kevin O'Byrne ICAEW 42 539 554 558 3 28.04.07  
Daily Mail & General Trust Peter Williams ICAEW 54 538 144 785 553 16 01.10.06
Diageo Nick Rose   49 559 798 1,392 1,341 8 30.06.06
Drax Group Gordon Boyd CIMA 47 213 141 418 351 2 31.12.06
Enterprise Inns David George CIMA 56 315 142 477 438 16 30.09.06
Experian Group* Paul Brooks ICAEW 53 296 264 679 530 6 31.03.07
Friends Provident5 Philip Moore   47 398 229 636 538 4 31.12.06
GlaxoSmithKline Julian Heslop ICAEW 53 380 437 848 529 2 31.12.06
HBOS Phil Hodkinson   49 802 428 1,307 1,006 2 31.12.06
HSBC Holdings Douglas Flint ICAS,CIMA   52 563 500 1,355 1,190 12 31.12.06
Hammerson Simon Melliss ICAEW 54 330 199 555 454 12 31.12.06
Hanson6 Jonathan Nicholls ICAEW 49 354   402 763 9 31.12.06
Home Retail Group Richard Ashton ICAEW 40 336 363 793 453 1 03.03.07
ICAP Matthew Lester ICAEW 43 142 550 694 n/a 1 31.03.07
ITV7 John Cresswell ICAEW 46 448 238 706 n/a 1 31.12.06
ICI Alan Brown CIMA 49 415 278 830 77 2 31.12.06
Imperial Tobacco Group Bob Dyrbus ICAEW 54 495 287 1,797 1,712 10 31.12.06
InterContinental Hotels Richard Solomons ICAEW 45 440 351 806 423 5 31.12.06
International Power Mark Williamson CA (SA) 49 360 360 820 801 3 31.12.06
Invesco8 Loren Starr   45 n/a n/a n/a n/a 2 31.12.06
Johnson Matthey John Sheldrick CIMA 57 392 206 612 544 12 31.03.07
Kazakhmys Oleg Novachuk   36 600 480 1,106 335 2 31.12.06
Kelda Group Martin Towers ICAEW 54 196 133 341 283 4 31.03.07
Kingfisher Duncan Tatton-Brown CIMA 42 420 221 696 446 3 03.02.07
Land Securities Group Martin Greenslade ICAEW 42 326 282 702 387 2 31.03.07
Legal & General Group Andrew Palmer ICAEW 53 415 373 823 760 6 31.12.06
Liberty International Aidan Smith CA (SA) 47 246 75 383 269 9 31.12.06
Lloyds TSB Group Helen Weir CIMA 45 500 715 1,310 963 3 31.12.06
Lonmin9 John Robinson ICAEW 52 319 227 633 462 8 30.09.06
Man Group10 Peter Clarke   47 385 4,752 5,159 3,978 6 31.03.07
Marks & Spencer Group Ian Dyson ICAEW 45 486 525 1,151 685 2 31.03.07
Mitchells & Butlers Karim Naffah   44 376 288 677 595 4 30.09.06
Morrison (Wm) Supermarkets Richard Pennycook ICAEW 43 480 475 1,483 141 2 04.02.07
National Grid Steve Lucas ICAEW 53 472 426 928 848 5 31.03.07
Next David Keens ACCA 54 397 309 732 535 16 27.01.07
Northern Rock11 Bob Bennett ICAEW, CIMA 59 455 435 909 738 13 31.12.06
Old Mutual12 Jonathan Nicholls ICAEW 49 79 300 419 n/a 1 31.12.06
Pearson13 Robin Freestone ICAEW 48 209 243 460 n/a 1 31.12.06
Persimmon Mike Killoran ICAEW 45 310 443 1,161 1,137 8 31.12.06
Prudential Philip Broadley ICAEW 46 530 477 1,174 1,000 7 31.12.06
Punch Taverns Robert McDonald CIMA 51 240 130 386 330 5 19.08.06
Reckitt Benckiser Colin Day ACCA   52 384 907 1,436 1,285 7 31.12.06
Reed Elsevier Mark Armour ICAEW 52 562 489 1,072 1,029 11 31.12.06
Resolution Mike Biggs ICAEW 54 375 364 825 317 2 31.12.06
Reuters Group David Grigson ICAEW 51 469 534 1,087 839 7 31.12.06
Rexam David Robbie ICAEW 44 361 50 424 158 2 31.12.06
Rio Tinto* Guy Elliott   51 504 501 1,456 1,004 5 31.12.06
Rolls-Royce Group Andrew Shilston ICAEW 51 455 233 832 803 4 31.12.06
Royal & SunAlliance Insurance George Culmer ICAEW 44 437 381 915 849 3 31.12.06
Royal Bank of Scotland14 Guy Whittaker   50 663 1,190 4,475 n/a 1 31.12.06
Royal Dutch Shell Peter Voser   49 597 751 1,396 1,369 2 31.12.06
SABMiller Malcolm Wyman CA (SA) 60 575 565 1,292 1,181 6 31.03.07
Sage Group Paul Harrison ICAEW 42 300 308 653 568 7 30.09.06
Sainsbury (J) Darren Shapland   40 433 405 919 619 2 24.03.07
Schroders15 Jonathan Asquith   50 200 1,042 1,268 762 5 31.12.06
Scottish & Newcastle Ian McHoul ICAEW 46 420 299 861 647 6 31.12.06
Scottish & Southern Energy Gregor Alexander ICAS 44 360 282 656 531 5 31.03.07
Segro David Sleath ICAEW 45 315 146 479 n/a 1 31.12.06
Severn Trent Mike McKeon ICAS 50 370 244 705 265 2 31.03.07
Shire * Angus Russell ICAEW 51 348 482 845 591 8 31.12.06
Smith & Nephew Adrian Hennah ICAEW 48 321 169 502 n/a 1 15.03.07
Smiths Group16 Alan Thomson ICAS 60 436 352 827 950 12 05.08.06
Standard Chartered* Richard Meddings ICAEW 49 417 417 1,096 n/a <1 31.12.06
Standard Life17 David Nish ICAS 47 78 70 175 n/a <1 31.12.06
Tate & Lyle18 John Nicholas ACCA 50 269 270 616 n/a 1 31.03.07
Tesco Andrew Higginson CIMA 49 686 1,416 2,661 2,300 10 24.02.07
Unilever**19 Rudy Markham CIMA 61 653 326 1,016 968 7 31.12.06
United Utilities20 Tim Weller ICAEW 44 267 185 492 n/a 1 31.03.07
Vedanta Resources21 DD Jalan ICAI (India) 50 n/a n/a n/a n/a 2 31.03.07
Vodafone Group Andy Halford ICAEW 48 592 897 1,690 754 2 31.03.07
WPP Group Paul Richardson ICAEW 49 447 501 1,612 1,490 11 31.12.06
Whitbread Christopher Rogers ICAEW 44 410 683 1,178 494 2 01.03.07
Wolseley Stephen Webster ICAEW 54 475 481 1,077 1,084 13 31.07.06
Xstrata* Trevor Reid   46 430 458 1,914 1,496 5 31.12.06
Yell Group John Davis ICAEW 47 463 855 1,581 905 7 31.03.07
Totals       40,194 44,422 98,928 67,964    
Average     49 419 483 1,030 819 5  

* Converted from US dollars at a rate of $1=£0.496 ** Converted from Euros at a rate of €1=£0.67

NOTES TO TABLE

1. Resigned 31.03.07

2. Joined board 1 March 2006 and appointed FD 1 July 2006

3. Remuneration not disclosed

4. Luff appointed March 2007

5. Smart appointed FD 1 January 2007. On merger with Resolution, new FD will be Jim Newman

6. Nicholls resigned 31 October 2006

7. Appointed 16 January 2006

8. Not a board member - remuneration not individually disclosed

9. Ferguson appointed June 2007

10. Hayes appointed 1 March 2007

11. Jones appointed February 2007

12. Appointed 1 November 2006

13. Appointed June 2006

14. Appointed 1 February 2006

15. Now vice chairman. No CFO

16. Langston appointed 6 September 2006

17. Appointed November 2006

18. Appointed July 2006

19. Retired May 2007. Lawrence appointed 1 August 2007

20. Appointed 1 August 2006

21. Not a board member - remuneration not individually disclosed

NEW FDS

Barclays: Chris Lucas, 46, ICAEW

Carnival: David Bernstein

Centrica: Nick Luff, ICAEW

Friends Provident: Jim Smart, ACCA, 47

Hanson: Pavi Binning, CIMA, 46

Lonmin: Alan Ferguson, ICAS, 48

Man Group: Kevin Hayes, 47, CA(NZ)

Northern Rock: Dave Jones, 48, ICAEW

Resolution: Jim Newman, 42, ICAEW

Smiths Group: John Langston, 56, ICAEW

Unilever: James Lawrence, 54

NOTES ON COMPILATION

Information is taken directly from the companies' remuneration reports. Pension contributions are, wherever possible, excluded from total remuneration. Bonuses generally represent cash bonus payments, unless the company has included share-based bonuses. Total remuneration includes all long-term, short-term and deferred bonus payments as well as benefits in kind and, where applicable, payments received in lieu of pension contributions.

Survey research and reporting by Liz Fisher.

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