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%.
Note: This table reflects current FDs. Prior year survey figures in brackets
Average remuneration of FTSE 100 FDsSource: Accountancy annual survey.Year is year of survey
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 |
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 FDSBarclays: 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 COMPILATIONInformation 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.