FTSE 100 Survey: Let the bad times roll

Profits going down the pan? Better take a pay rise. Accountancy's 2001 FTSE 100 survey looks at how FDs and auditors in the UK's top companies are faring in the current economic climate.
Brian Singleton-Green and Christina Buckingham

The accounts examined in this year's Accountancy FTSE 100 survey cover the start of the slowdown in the global and UK economies. But you'd never guess that from the numbers. They show a significant number of FDs now receiving over £1m a year, the median pay for an FD rising to over £450,000 and the Big Five auditors making over £840m from their FTSE 100 clients - up 22% on the year before.

The directors' cut

The highest paid director in the survey - or ever, for that matter - is Vodafone AirTouch's Ken Hydon, who received £3.036m. In all, six FDs received over £1m, compared with three in last year's survey. David Kappler of Cadbury Schweppes, the first FD to pass the £1m mark, does so for the third successive year.

Forty-two FDs received over £500,000 (as opposed to 28 last year) and the median remuneration rose from more than £400,000 to more than £450,000, an increase of over 12%. This partly reflects the changing composition of the FTSE 100, a point we return to later.

As last year, the survey shows that the typical FD stays in the post for about eight years, has been internally promoted and probably spends about 16 years with the company altogether.

Forty-nine of the FDs in the survey (v 52 last year) have already been in post for four years or more and 38 (v 39) of them for more than five years. Fifty-one of them (v 50 last year) have already been with the company for eight years or more, 39 (v 36) for 10 years or more, and 10 (v 14) for 20 years or more.

The ICAEW has strengthened its hold on the top jobs. Fifty-seven of the FDs in the survey can be identified as ICAEW members (v 53 last time), 14 as CIMA members, six as Scottish CAs, four as ACCA members, and three as South African CAs.

The number of female FDs in the survey is growing at a rate of 100% a year - they went up from one to two, Kingfisher's Helen Weir joining the long-established Kathleen O'Donovan of Invensys (formerly BTR).

We must consult

Although you might get the impression from reports in the press that audit firms are separating from their consultancies, our survey shows little evidence of this as yet. The audit now provides only 25% of auditors' total fee income from their clients (v 27% last year).

Total fee income from the companies in the survey rose an extraordinary 22% to £843m, which combines a 7% rise in audit fees to £215m with a 28% rise in non-audit fees to £628m.

BP Amoco, audited by Ernst & Young, reports the highest audit fee: £18.7m. Its total fees to E&Y were £52.9m. HSBC paid its auditor, KPMG, £17.3m for the audit and £27.3m altogether. Shell paid its joint auditors, PricewaterhouseCoopers and KPMG, £11.4m for the audit and £42.9m altogether. Lloyds TSB paid PwC £4m for the audit and £36m altogether.

The survey shows a slight fall in PwC's dominance of the top 100 audits. It now audits 45.5 of them (counting joint audits as 0.5) against 49.5 last year. KPMG remains unchanged on 23. E&Y has gone up from 11 to 13.5. Deloitte & Touche has fallen from 12.5 to 10. And Andersen has risen from five audits to eight. The significant feature of these figures is that E&Y, which last year fell behind D&T for the first time, has now overtaken it again. The changes are almost entirely the result of changes in the FTSE 100 constituents, rather than of one firm being fired and another appointed.

Death of the new

The past year has seen unprecedented turmoil in the FTSE 100. Our survey reflects changes to the index's constituents announced on 12 September 2001. Since last year's survey, 21 of the constituent companies have changed. This reflects mergers, demergers and the fall from favour of TMT stocks - technology, media and telecommunications. The new economy is dead, and it can now be seen how the temporary wild enthusiasm for TMT stocks distorted the message given by the FTSE 100 stocks.

The changes provide part of the explanation for the significant apparent increase in FDs' pay. A number of the companies in the FTSE 100 a year ago were relatively small, but remarkably highly valued. Their FDs' pay was typically low by FTSE 100 standards, reflecting their real economic status rather than the market's inflated view of them. Now that they have been eliminated from the FTSE, the average FD's pay has risen partly through the mere fact of the change in the constituents of the index.

Because last year's survey included some unusually small companies, the figures for audit fees were also unusually low. Last year, we reported total audit fees of £175m; by contrast, last year's audit fees for the companies in this year's survey were £201m. This is accounted for by Shell now disclosing its audit fees and by the change in the index's constituents.

The year ahead seems likely to be one of further turmoil and declining profits. Perhaps directors' pay and accountants' fees will begin to reflect that.

Survey compiled by Christina Buckingham


FTSE 100 Finance Directors
Company Year-end Current FD Qualifics. FD in yr in question Total pay (£000) Previous yr (£000) Yrs in post Yrs in co
3i Group 31.3.01 Michael Queen FCA M Queen 480 490 4 14
ARM Holdings 31.12.00 Jonathan Brooks ACMA J Brooks 236 170 3 6
Abbey National 31.12.00 Mark Pain FCA M Pain 405 268 3 12
Alliance & Leicester 31.12.00 Richard Pym FCA R Pym 571 568 8 9
Allied Domecq 31.8.00 Graham Hetherington FCMA G Hetherington 539 294 2 10
Amersham 31.12.00 Giles Kerr ACA G Kerr 418 318 4 10
Amvescap 31.12.00 Robert McCullough CPA R McCullough 1,635 1,071 5 5
Anglo American 31.12.00 Tony Lea - T Lea 592 541 2 29
Associated British Foods 16.09.00 John Bason FCA J Bason 301 108 2 2
AstraZeneca 31.12.00 Jonathan Symonds FCA J Symonds 833 769 4 4
BAA 31.3.01 Russell Walls FCCA R Walls 468 320 6 6
BAE Systems 31.12.00 George Rose FCMA G Rose 520 440 3 9
BG Group 31.12.00 Andrew Bonfield CA (SA) P Hampton 913 364 10m 15m
BOC Group 30.9.00 Rene Medori - R Medori 269 675 15m 14
BP Amoco 31.12.00 John Buchanan - J Buchanan 1,022 937 5 31
Barclays 31.12.00 John Varley - D Allvey 686 445 1 19
Billiton 30.6.00 Michael Davis CA (SA) M Davis 948 804 4 4
Boots Co 31.3.01 David Thompson CA/FCIBS D Thompson 571 469 11 35
Brambles Industries 30.6.02 David Turner FCA - - - 8 8
British Airways 31.3.01 John Rishton ACMA D Stevens 410 292 2m 2m
British American Tobacco 31.12.00 Keith Dunt FCA K Dunt 682 619 3 26
British Land 31.3.01 John Weston Smith FCIS J Weston Smith 396 372 28 30
British Sky Broadcasting 3.6.00 Martin Stewart ACA M Stewart 597 429 3 5
BT 31.3.01 Philip Hampton ACA R Brace 541 524 11m 11m
CGNU 31.12.00 Mike Biggs ACA P Foster 470 417 7m 10
Cable and Wireless 31.3.01 Robert Lerwill FCA R Lerwill 984 1,769 4 4
Cadbury Schweppes 31.12.00 David Kappler FCMA D Kappler 1,349 1,057 6 12
Canary Wharf Group 30.6.00 Peter Andersen - P Andersen 420 232 6 6
Capita Group 31.12.00 Gordon Hurst FCA G Hurst 213 125 6 13
Celltech Group 31.12.00 Peter Allen ACA P Allen 458 282 9 9
Centrica 31.12.00 Phillip Bentley FCMA M Clare 450 373 1 1
Compass Group 30.9.99 Andrew Lynch FCA A Lynch 458 346 4 9
Daily Mail & General Trust 3.10.00 Peter Williams FCA P Williams 539 473 10 19
Diageo 30.6.00 Nick Rose - N Rose 868 568 2 4
Dixons Group 28.4.01 Ian Livingston FCA I Livingston 372 377 3 10
EMI Group 31.3.01 Tony Bates FCA T Bates 732 220 22m 11
Electrocomponents 31.3.01 Jeff Hewitt FCA J Hewitt 377 341 5 5
Enterprise Oil 31.12.00 Andrew Shilston FCA A Shilston 333 281 8 17
Friends Provident 31.12.00 Martin Jackson FCA M Jackson 216 96 2 3
GKN 31.12.00 Nigel Stein CA D Turner 398 450 3m 7
Gallaher 31.12.00 Mark Rolfe FCA P Burchell 254 532 15m 15
GlaxoSmithKline 31.12.00 John Coombe FCA J Coombe 791 537 9 15
Granada Media 30.9.00 Henry Staunton FCA H Staunton 509 422 8 8
Great Universal Stores 13.3.01 David Tyler FCMA D Tyler 540 317 4 4
HBOS 31.12.01 Mike Ellis FCT - - - 2m 14
HSBC Holdings 31.12.00 Douglas Flint CA D Flint 813 503 6 6
Hanson 31.12.00 Jonathan Nicholls FCA J Nicholls 373 356 3 5
Hays 30.6.00 Neil McLachlan FCA N McLachlan 234 304 2 8
Hilton Group 31.12.00 Brian Wallace ACA B Wallace 633 411 6 6
ICI 31.12.00 Tim Scott ACMA A Spall 578 559 5m 3
Imperial Tobacco 23.9.00 Robert Dyrbus FCA R Dyrbus 597 601 5 12
Innogy 31.3.01 Jeff Bateson - - 216 - 15m 15m
International Power 31.12.00 Philip Cox FCA - 104 - 1 17m
Invensys 31.3.01 Kathleen O'Donovan ACA K O'Donovan 455 633 10 10
Kingfisher 3.2.01 Helen Weir ACMA P Rowley 426 546 1 6
Land Securities 31.3.01 James Murray FCA J Murray 533 331 10 20
Lattice 31.12.00 Steve Lucas ACA - 56 - 11m 7
Legal & General Group 31.12.00 Andrew Palmer FCA A Hobson 425 454 10m 13
Lloyds TSB Group 31.12.00 M Kent Atkinson FIB M K Atkinson 509 482 4 30
Logica 30.6.00 Andrew Given - A Given 353 353 11 11
MAN Group 31.3.01 PeterClarke - P Clarke 1,411 962 17m 8
Marks & Spencer 31.3.01 Robert Colvill FCIS R Colvill 415 402 11 13
Morrison (Wm) Supermkts 4.2.01 Martin Ackroyd FCT M Ackroyd 267 211 14 27
National Grid Group 31.3.01 Stephen Box FCA S Box 455 348 4 4
Next 27.1.01 David Keens - D Keens 420 386 10 15
Northern Rock 31.12.00 Robert Bennett FCA/FCMA R Bennett 356 318 7 7
Old Mutual 31.12.00 Julian Roberts FCA E Anstee 703 525 14m 14m
Pearson 31.12.00 John Makinson ACA J Makinson 616 635 5 7
Powergen 31.12.00 Peter Hickson FCA P Hickson 498 455 3 5
Prudential 31.12.00 Philip Broadley FCA P Broadley 293 165 17m 17m
Reckitt Benckiser 31.12.00 Colin Day FCCA C Day 328 - 13m 13m
Reed International 31.12.00 Mark Armour ACA M Armour 571 391 5 5
Rentokil Initial 31.12.00 Roger Payne ACCA C Pearce 428 409 9m 15
Reuters Group 31.12.00 David Grigson ACA R Rowley 632 556 14m 14m
Rio Tinto 31.12.00 Christopher Bull FCA C Bull 577 547 10 10
Rolls-Royce 31.12.00 Paul Heiden ACA P Heiden 419 354 2 9
Royal & Sun Alliance 31.12.00 Julian Hance FCA J Hance 365 285 4 14
Royal Bank of Scotland 31.12.00 Fred Watt CA F Watt 176 - 13m 13m
Safeway 31.3.01 Simon Laffin ACMA S Laffin 444 317 5 11
Sage Group 30.9.00 Paul Harrison ACA A Hughes 131 189 18m 4
Sainsbury (J) 31.3.01 Roger Matthews FCA R Matthews 565 602 2 2
Schroders 31.12.00 Nicholas MacAndrew FCA N MacAndrew 1,431 967 10 30
Scottish & Newcastle 30.4.01 Ian McHoul ACA D Wilkinson 353 320 3m 3
Scottish & Southern Energy 31.3.01 Ian Marchant ACA I Marchant 366 295 5 9
Scottish Power 31.3.01 David Nish CA D Nish 253 91 22m 4
Severn Trent 31.3.01 Alan Costin FCA A Costin 264 231 9 9
Shell 31.12.00 None - - - - - -
Shire Pharmaceuticals 31.12.00 Angus Russell ACT/ACA A Russell 315 13 21m 21m
Six Continents 30.9.00 Richard North FCA R North 643 543 6 6
Smith & Nephew 31.12.00 Peter Hooley FCA P Hooley 489 432 10 10
Smiths Group 31.7.00 Alan Thomson CA A Thomson 456 390 6 6
South African Breweries 31.3.01 Malcolm Wyman CA (SA) N Cox 457 502 8m 15
Standard Chartered 31.12.00 Peter Kenny FCA P Kenny 754 307 2 2
Tesco 24.2.01 Andrew Higginson FCMA A Higginson 809 644 4 4
Unilever 31.12.00 Rudy Markham FCMA P Cescau 699 271 15m 33
United Business Media 31.12.00 Nigel Wilson - C Stern 519 403 3m 3m
United Utilities 31.3.01 Simon Batey FCA S Batey 416 - 18m 18m
Vodafone AirTouch 31.3.01 Ken Hydon FCMA/FCCA K Hydon 3,036 762 16 16
Wolseley 31.7.00 Stephen Webster FCA S Webster 309 277 7 7
WPP Group 31.12.00 Paul Richardson ACA/ACT P Richardson 428 349 5   9

NOTES

Pay is from date of appointment to year-end. When no comparative is given, the information was not available in the annual report. Qualifications are listed if provided in the annual report or ICAEW/CIMA/ACCA members' register. Salaries for AstraZeneca, Billiton, BP, and Shire Pharmaceuticals were quoted in dollars; they have been changed as at the exchange rate at 31.12.00 of $1.4938 to the £. Salaries for Unilever quoted in euros and converted at 31.12.00 rate of 1.5911 to the £.

BOC, Diageo, Hays, Prudential, Sainsbury: prior year figures are for the prvious FD. Brambles - new conglomerate. No annual rep ort yet. Compass Group - no annual accounts for 2000 because of Granada merger or since then because of demerger. GSK - salary refers to positio n as FD of GlaxoWellcome. HBOS - new conglomerate. No annual report yet.

FTSE 100 Auditors
FTSE 100 year end auditors audit fee £m other: uk £m other: o/s £m prev yr audit fee prev other UK prev other o/s
3i Group 31.3.01 E & Y 0.5 0.3 0.1 0.4 0.6 -
ARM holdings 31.12.00 PwC 0.14 0.158 - 0.074 0.284 -
Abbey National 31.12.00 D & T 4 7.8 - 4.1 6.1 -
Alliance & Leicester 31.12.00 D & T 0.3 0.8 - 0.2 1.4 -
Allied Domecq 31.8.00 KPMG 2 1 - 2 3 -
Amersham 31.12.00 PwC 1.2 0.4 - 1 0.8 -
Amvescap 31.12.00 AA 1.36 1.29 - 1.22 1.04 -
Anglo American 31.12.00 D & T 6.69 1.34 1.34 7.36 2.01 6.02
Associated British Foods 16.9.00 KPMG 1.9 2.7 - 1.9 1.4 -
AstraZeneca 31.12.00 KPMG 2.14 5.96 3.35 3.88 13.9 5.62
BAA 31.3.01 D & T 0.704 1.14 1.06 0.579 2.56 0.701
BAE Systems 31.12.00 KPMG 3.03 14.3 1.91 2.99 9.05 0.597
BG Group 31.12.00 PwC 1.4 4.5 1.8 1.3 4.9 1.9
BOC Group 30.9.00 PwC 1.8 2.6 0.7 1.6 0.2 0.8
BP Amoco 31.12.00 E & Y 18.7 13.4 20.8 13.4 10.0 14.1
Barclays 31.12.00 PwC 4.6 15.6 11.4 4.2 29.1 5.7
Billiton 30.6.00 KPMG/ PwC 2.01 6.02 - 2.68 4.02 -
Boots Co 31.3.01 KPMG 0.9 2.1 0.2 0.8 6.4 0.4
Brambles Industries 30.6.02 PwC - - - - - -
British Airways 31.3.01 E & Y 1.25 3.56 0.568 1.22 1.56 0.406
British American Tobacco 31.12.00 PwC 6 2 4.3 6 3 3.7
British Land 31.3.01 AA 0.5 1.4 - 0.5 2.3 -
British Sky Broadcasting 30.6.00 AA 0.4 5.7 - 0.4 2.4 -
BT 31.3.01 PwC 2.1 16.2 3.02 2.06 12.7 6.4
CGNU 31.12.00 PwC/E&Y 6.7 36.8 6.2 8.9 9.2 2.7
Cable & Wireless 31.3.01 KPMG 2.7 12.4 4.6 2.5 9.5 5.0
Cadbury Schweppes 31.12.00 AA 2 3 - 2 1 -
Canary Wharf Group 30.6.00 AA 0.237 0.221 - 0.225 2.07 -
Capita Group 31.12.00 E & Y 0.330 0.177 - 0.232 0.581 -
Celltech Group 31.12.00 E & Y 0.4 0.7 - 0.1 0.3 -
Centrica 31.12.00 PwC 1.3 10.5 - 1.1 2.5 -
Compass Group 30.9.99 D & T 1.5 0.9 - 1.4 4 -
Daily Mail & General Trust 1.10.00 PwC 1.9 0.9 - 1.6 0.7 -
Diageo 30.6.00 KPMG 2.5 4.5 2.5 2.6 1.5 1.7
Dixons Group 28.4.01 D & T 0.5 1.2 - 0.4 1.9 -
EMI Group 31.3.01 E & Y 2.4 3.5 1.6 2.2 0.3 1.5
Electrocomponents 31.3.01 KPMG 0.5 0.8 - 0.5 0.7 -
Enterprise Oil 31.12.00 KPMG 0.394 0.134 0.243 0.382 0.308 0.172
Friends Provident 31.1.200 PwC 0.3 1.7 - 0.5 0.2 -
GKN 31.12.00 PwC 2.7 1.5 - 2.5 0.7 -
Gallaher 31.1.200 PwC 0.5 1.5 - 0.4 1.4 -
GlaxoSmithKline 31.12.00 PwC 6.3 9.4 15.3 6.5 5.2 8.9
Granada Media 30.9.00 KPMG 0.297 2.6 - 0.117 0.072 -
Great Universal Stores 31.3.01 PwC 1.9 8.3 - 1.7 5.4 -
HBOS 31.12.01 KPMG - - - - - -
HSBC Holdings 31.12.00 KPMG 17.3 10 - 13.3 11.8 -
Hanson 31.12.00 E & Y 1.5 2.1 0.6 1.3 0.5 0.7
Hays 30.6.00 D & T 1.2 0.6 - 1.2 0.5 -
Hilton Group 31.12.00 E & Y 1.5 0.7 0.7 1.6 1.3 0.6
ICI 31.12.00 KPMG 2.9 5.1 - 3.5 6.3 -
Imperial Tobacco 23.9.00 PwC 0.7 0.8 0.4 0.6 1.2 0.2
Innogy 31.3.01 KPMG 0.4 0.3 - - - -
International Power 31.12.00 KPMG 0.9 7.4 - 0.9 5.0 -
Invensys 31.3.01 E & Y 4 5 3 4 5 3
Kingfisher 3.2.01 PwC 1.6 8.3 - 1.2 4.7 -
Land Securities 31.3.01 PwC 0.3 2.3 - 0.2 0.491 -
Lattice Group 31.12.00 PwC 1.3 1.2 - 1.4 3.6 -
Legal & General Group 31.12.00 PwC 1.0 0.4 0.1 1.1 1.2 0.2
Lloyds TSB Group 31.12.00 PwC 4 32 - 4 29 -
Logica 30.6.00 PwC 0.6 0.5 - 0.5 0.3 -
MAN Group 31.3.01 PwC 0.8 0.1 - 0.7 0.2 -
Marks and Spencer 31.3.01 PwC 1.1 2.1 - 1.1 2.8  
Morrison (Wm) Supermkts 4.2.01 KPMG 0.140 0.072 - 0.136 0.043 -
National Grid Group 31.3.01 PwC 1.0 11.4 - 0.5 4.2 -
Next 27.1.01 E & Y 0.2 0.1 - 0.2 0.1 -
Northern Rock 31.12.00 PwC 0.2 1.5 - 0.2 0.9 -
Old Mutual 31.12.00 KPMG 4 4 - 3 2 -
Pearson 31.12.00 PwC 2 3 5 2 10 2    
Powergen 31.12.00 PwC 0.6 2.6 - 0.5 4.7 -
Prudential 31.12.00 KPMG 1.9 18.8 1.2 1.6 10.4 1.6
Reckitt Benckiser 31.12.00 PwC 1.9 2.2 - 2.3 4.6 -
Reed International 31.12.00 D & T 0.022 0.350 - 0.021 - -
Rentokil Initial 31.12.00 PwC 2.4 2.2 - 2.6 0.1 -
Reuters Group 31.12.00 PwC 1.8 5.9 7.2 1.9 4.7 5.9
Rio Tinto 31.12.00 PwC 2.7 3.2 - 2.7 4.2 -
Rolls-Royce 31.12.00 KPMG 2.9 1.1 0.9 2 0.7 0.7  
Royal & Sun Alliance 31.12.00 PwC 4.20 11.0 - 4.29 3.90 -
Royal Bank of Scotland 31.12.00 D & T 4.9 4.0 - 2.4 9.4 -
Safeway 31.3.01 AA 0.3 0.3 - 0.3 0.3 -
Sage Group 30.9.00 PwC 0.440 0.450 - 0.322 0.149 -
Sainsbury (J) 31.3.01 PwC 0.7 12.9 - 0.7 5.2 -
Schroders 31.12.00 PwC 1.1 3.6 0.5 2.0 0.7 0.6
Scottish & Newcastle 29.4.01 E & Y 1.2 3.0 - 0.8 2.1 -
Scottish & Southern Energy 31.3.01 KPMG 0.2 0.03 - 0.2 0.05 -
Scottish Power 31.3.01 PwC 1.5 11.4 - 1.1 10.1 -
Severn Trent 31.3.01 PwC 0.6 2.9 - 0.5 0.7 -
Shell T & T 31.12.00 PwC/KPMG 11.4 31.5 - 12.0 20.1 -
Shire Pharmaceuticals 31.12.00 AA 0.350 1.40 - 0.289 0.994 -
Six Continents 30.9.00 E & Y 1.7 1.3 - 1.6 0.9 -
Smith & Nephew 31.12.00 E & Y 1 1.2 0.9 1.1 0.5 0.8
Smiths Group 31.7.00 PwC 1.5 0.1 1.2 1.3 0.1 0.6
South African Breweries 31.3.01 PwC 2.01 4.69 - 2.01 3.35 -
Standard Chartered 31.12.00 KPMG 2.9 3.4 - 2.7 1.2 -
Tesco 24.2.01 PwC 0.8 0.5 0.4 0.8 1.6 2.0
Unilever 31.12.00 PwC 8.17 39.0 - 7.54 22.0 -
United Business Media 31.12.00 PwC 0.6 13.3 - 1.0 13.1 -
United Utilities 31.3.01 KPMG 0.3 0.7 - 0.3 0.4 -
Vodafone AirTouch 31.3.01 D&T 3 12 10 1 10 6  
Wolseley 31.7.00 PwC 1.5 3.0 1.0 1.9 2.0 1.6
WPP Group 31.12.00 AA 3.7 6.4 - 2.4 3.7 -

NOTES

Fees for Anglo American, AstraZeneca, BP, Billiton, HSBC Holdings, Shell and South African Breweries are quoted in dollars. They have been converted as at the exchange rate of 31.12.00 of $ 1.4938 to the £. Audit fees for Unilever are quoted in euros. They have been converted as at the exchange rate of 31.12.00 of 1.5911 to the £. Billiton - fees not split between KPMG and PwC. CGNU - audit fees are not divided between PwC and Ernst & Young. Compass Group - produced no annual report in 2000 because of Granada merger or since then because of demerger. Shell - fees not split between KPMG and PwC. HBOS - new conglomerate. No annu al report yet. Prior year figures for Alliance & Leicester relate to KPMG. Prior year figures for AstraZeneca include fees paid to D&T. Prior year figures for Prudential include fees paid to PwC. Prior year figures for Reckitt Benckiser include fees paid to D&T. Prior year figures for Royal Bank of Scotland relate to PwC. UK figures for non-audit fees may include fees for overseas work where they are not disclosed seperately.

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