The average remuneration of the finance directors of the FTSE 100 companies continues to rise ahead of inflation. This year's survey of FTSE 100 FDs shows a 6% increase in average remuneration, from 676,000 to 716,000. Once again, bonuses feature heavily, often inflating an FD's total remuneration by as much as 100%.
The survey shows that the average base salary for a FTSE 100 FD is 368,000.
The FDs in our survey, however, received an average annual bonus during the last financial year of 289,000. Two FDs, Peter Clarke of Man Group and Andrew Higginson of Tesco, received a bonus of more than 1m, with Peter Clarke receiving an immense 2.1m.
Performance-related bonuses have become the most important element of directors' remuneration in recent years and almost all of the FDs in our survey received a bonus of at least 100,000. Only four FDs - John Rishton of British Airways, Peter Williams of Daily Mail & General Trust, Jeremy Darroch of Dixons and Alison Reed of Marks & Spencer - received no bonus during the last financial year. Of these, M&S and Daily Mail failed to meet their targets, and the directors of British Airways voluntarily waived their bonuses. Darroch resigned at the end of the year to take up a new position at BSkyB.
Performance measurement
Companies usually based their performance calculations on a complicated formula of reported pre-tax profit, shareholder return or unspecified personal management targets, or a combination of two or more criteria.
Some companies, however, are prepared to reduce bonuses even if financial targets are met. Steve Lucas, FD of National Grid Transco, for instance, saw his bonus reduced by 10% of salary 'to reflect UK power outages' suffered by some parts of the country during the financial year.
Movers and shakers
It has been a year of unusual movement in the boardroom of the FTSE 100, with new FDs appointed by 10 of the companies in our survey.
Some of the changes are due to internal promotion or retirement, such as John Varley's appointment as group deputy chief executive of Barclays in January 2004. Ken Hanna joined Cadbury's as finance director earlier this year following the retirement of David Kappler. Other transitions have been less smooth, though, and the past few months have seen their share of boardroom spats, resignations and frantic headhunting.
In July, Jeremy Darroch resigned as FD of Dixons, the second finance director that the group has lost in the space of two years. Just as his predecessor, Ian Livingston, was unable to resist the offer of a board seat with a larger company (he joined BT in February 2002), Darroch was poached by BSkyB. It is certainly a lucrative move as his base salary in the new position will be 500,000 and he will receive 250,000 shares under BSkyB's long-term incentive scheme in 2007 provided he meets specified targets.
Media spotlight
BSkyB needed a high-level appointment as it had lost its own chief financial officer, Martin Stewart, under a glaring media spotlight. Stewart, who had been CFO since 1998 and was in the running for chief executive of the group, resigned in order to 'pursue other opportunities' after James Murdoch was appointed to the post.
Meanwhile at Kingfisher, one of the few female finance directors in the FTSE 100 was on the move following a boardroom coup at Lloyds TSB. Philip Hampton resigned from the bank following what was reported as a disagreement over the dividend payment with his chief executive. Helen Weir, finance director at Kingfisher since 2000, was appointed as his replacement in April 2004, increasing her base salary by more than 100,000 in the process.
Hostile shareholders
Julian Hance, finance director at Royal & Sun Alliance, had signalled his intention to leave the company in September 2003. His move from the insurer proved to be one of the more lucrative in the FTSE 100. Hance had received a retention and continuity bonus of 250,000 during 2003 to reward him for staying on with the company in order to help with the transition after two other senior executives had resigned, a payment that attracted some hostility from shareholders. He also received an enhancement to his pension worth 1.5m.
Another winner during the year was Andrew Moss, the newly appointed FD of Aviva. As compensation for loss of an incentive bonus from his previous employer, Lloyd's of London, he will be entitled to shares worth more than 500,000 over the next two years and will receive a base salary of 440,000.
Moss replaced Mike Biggs, one of the finance directors earning more than 1m in last year's survey. Biggs announced in 2003 that he was going to leave Aviva in order to take a break and reconsider his career.
How old is the average FD?
The average age of the finance directors in our survey is now almost 47.8, a slight increase from last year. Ian Livingston, the youngest director in last year's survey has been usurped thanks to a new constituent to the FTSE 100, Hays plc, and its 37-year-old FD, John Martin. Only two FDs, Martin and the newly-appointed Naguib Kheraj of Barclays, are under 40.
None of the directors in the survey is over 60 now that Robert McCullough has retired from Amvescap. Ken Hydon, at 59, is the oldest FD in this year's survey and is due to retire from Vodafone's board in 2005.
Women under-represented
The number of female FDs in the FTSE 100 remains constant at five this year - the same five that appeared in last year's survey. The only change has come from Helen Weir, who left Kingfisher to join Lloyds TSB earlier this year. Weir remains the highest-paid female FD in the survey, receiving 644,000 in total in her last year at Kingfisher.
All of the female FDs in the survey received less than the average total remuneration for the FTSE 100.
NOTES TO TABLE
1. Bonus consists of 455,000 cash and 221,000 in shares that will not be awarded for three years.
2. New FD appointed April 2004.
3. Biggs resigned December 2003. Moss appointed May 2004.
4. Not a board member.
5. Total includes a deferred bonus. 162,500 of bonus will be paid in shares in three years' time.
6. Varley promoted to group deputy chief executive on 1 January 2004.
7. Salary and bonus is for four months since appointment. Previous FD, David Prince, received 574,000 before his departure on 1 December 2003.
8. Kappler retired April 2004.
9. Remuneration not yet disclosed.
10. Darroch resigned July 2004.
11. Former FD Martin Jackson received 351,000 during the year and resigned September 2003.
12. ITV plc began trading February 2004. Remuneration not yet disclosed.
13. Tatton-Brown appointed February 2004.
14. Helen Weir replaced Hampton in April 2004.
15. 2002 bonus includes compensation for loss of bonus from previous employer.
16. Total is for eight months to December 2003. Previous year is for 12 months.
| Finance director Institute Age Salary (000s) 3i Group Michael Queen ICAEW 43 364 Abbey National1 Stephen Hester 43 520 Alliance & Leicester David Bennett 41 323 Alliance UniChem George Fairweather ICAS 46 330 Allied Domecq Graham Hetherington CIMA 45 335 Amvescap2 Robert McCullough (now James Robertson) CPA(ICAEW) 61(46) 252 Anglo American Tony Lea 55 475 Antofagasta No FD Associated British Foods John Bason ICAEW 46 377 AstraZeneca Jonathan Symonds ICAEW 44 534 Aviva3 Mike Biggs (now Andrew Moss) ICAEW(ICAEW) 51(46) 459 BAA Margaret Ewing ICAEW 49 370 BAE Systems George Rose CIMA 52 448 BG Group Ashley Almanza CA(SA) 40 353 BHP Billiton* 4 Chris Lynch CPA 49 331 BOC Group Rene Medori 46 342 BP* Byron Grote 55 434 BT Group5 Ian Livingston ICAEW 40 450 Barclays6 John Varley (now Naguib Kheraj) 48(39) 471 Boots Group Howard Dodd ICAS 44 373 Bradford & Bingley Rosemary Thorne CIMA 52 309 British Airways John Rishton 46 305 British American Tobacco Paul Rayner ICAEW 49 485 British Land Co Graham Roberts ICAEW 45 266 British Sky Broadcasting Group Martin Stewart (now Jeremy Darroch) ICAEW(ICAEW) 39(41) 400 Bunzl David Williams ICAEW 58 400 Cable & Wireless7 Charles Herlinger ICAEW/CPA 48 133 Cadbury Schweppes8 David Kappler (now Ken Hanna) CIMA(ICAEW) 56(51) 477 Capita Group Gordon Hurst ICAEW 42 185 Carnival9 Gerald Cahill CPA 52 n/a Centrica Phillip Bentley CIMA 45 440 Compass Group Andrew Lynch (now Andrew Martin) ICAEW(ICAEW) 47(44) 485 Daily Mail & General Trust Peter Williams ICAEW 51 352 Diageo Nick Rose 47 453 Dixons Group10 Jeremy Darroch (now Kevin O'Byrne) ICAEW(ICAEW) 41(39) 390 Emap Gary Hughes ICAEW 42 310 Enterprise Inns David George CIMA 52 240 Exel John Coghlan ICAEW 45 331 Friends Provident11 Philip Moore 44 147 GUS David Tyler CIMA 51 420 Gallaher Group Mark Rolfe ICAEW 45 370 GlaxoSmithKline John Coombe ICAEW 58 490 HBOS Mike Ellis CIPFA 52 523 HSBC Holdings Douglas Flint ICAS 48 564 Hanson Jonathan Nicholls ICAEW 46 370 Hays John Martin ICAEW 37 127 Hilton Group Brian Wallace ICAEW 49 457 ITV12 Henry Staunton ICAEW 56 n/a Imperial Chemical Industries Timothy Scott CIMA 41 355 Imperial Tobacco Group Robert Dyrbus ICAEW 50 380 InterContintental Hotels Richard Solomons ICAS 42 250 Johnson Matthey John Sheldrick CIMA 54 317 Kingfisher13 Helen Weir (now Duncan Tatton- Brown) CIMA(-) 41(38) 340 Land Securities Group Andrew McFarlane ICAEW 47 301 Legal & General Group Andrew Palmer ICAEW 50 340 Liberty International Aiden Smith CA(SA) 44 209 Lloyds TSB Group14 Philip Hampton (now Helen Weir) ICAEW(CIMA) 50(41) 483 Man Group Peter Clarke 44 295 Marks & Spencer Group Alison Reed ICAEW 47 360 mmO2 David Finch ICAEW 48 396 Morrison (Wm) Supermarkets Martin Ackroyd 52 330 National Grid Transco Steve Lucas ICAEW 50 375 Next David Keens ACCA 51 340 Northern Rock Bob Bennett ICAEW 56 350 Old Mutual Julian Roberts ICAEW 46 340 Pearson Rona Fairhead 43 363 Prudential Philip Broadley ICAEW 43 455 Reckitt Benckiser Colin Day ACCA 48 361 Reed Elsevier Group plc Mark Armour ICAEW 49 471 Rentokil Initial Roger Payne ACCA 55 457 Reuters Group David Grigson ICAEW 49 400 Rexam Graham Chipchase 41 334 Rio Tinto Guy Elliott 48 402 Rolls-Royce Group Andrew Shilston ICAEW 48 331 Royal & Sun Julian Hance Alliance (now George Culmer) ICAEW(ICAEW) 48(41) 436 Royal Bank of Scotland Fred Watt ICAS 43 531 SABMiller Malcolm Wyman CA(SA) 57 429 Sage Group Paul Harrison ICAEW 40 190 J Sainsbury Roger Matthews ICAEW 50 445 Schroders15 Jonathan Asquith 48 180 Scottish & Newcastle16 Ian McHoul ICAEW 44 227 Scottish & Southern Energy Gregor Alexander ICAS 41 175 Scottish Power David Nish ICAS 44 415 Severn Trent Alan Perelman 56 350 Shell Transport & Trading Co No FD Shire Pharmaceuticals Group Angus Russell ICAEW 48 320 Smith & Nephew Peter Hooley ICAEW 57 312 Smiths Group Alan Thompson ICAS 57 395 Standard Chartered * Peter Sands 42 415 Tesco Andrew Higginson CIMA 46 538 Tomkins Ken Lever ICAEW 50 375 Unilever Rudy Markham CIMA 58 580 United Utilities Simon Batey ICAEW 50 317 Vodafone Group Ken Hydon CIMA 59 733 WPP Group Paul Richardson ICAEW 46 447 Whitbread David Richardson ICAEW 52 339 William Hill Tom Singer ICAEW 40 243 Wolseley Stephen Webster ICAEW 50 335 Xstrata Trevor Reid 43 341 Yell Group John Davis ICAEW 42 340 Averages 48 368 Finance director Bonus Total Year end pay (000s) (000s) 3i Group Michael Queen 360 726 31.03.04 Abbey National1 Stephen Hester 676 1,196 31.12.03 Alliance & Leicester David Bennett 195 597 31.12.03 Alliance UniChem George Fairweather 165 517 31.12.03 Allied Domecq Graham Hetherington 507 928 31.08.03 Amvescap2 Robert McCullough (now James Robertson) 420 693 31.12.03 Anglo American Tony Lea 192 689 31.12.03 Antofagasta No FD Associated British Foods John Bason 138 537 14.09.03 AstraZeneca Jonathan Symonds 451 1,071 31.12.03 Aviva3 Mike Biggs (now Andrew Moss) 191 734 31.12.03 BAA Margaret Ewing 110 500 31.03.04 BAE Systems George Rose 188 652 31.12.03 BG Group Ashley Almanza 345 700 31.12.03 BHP Billiton* 4 Chris Lynch 532 962 30.06.03 BOC Group Rene Medori 192 810 30.09.03 BP* Byron Grote 565 1,100 31.12.03 BT Group5 Ian Livingston 325 913 31.03.04 Barclays6 John Varley (now Naguib Kheraj) 425 905 31.12.03 Boots Group Howard Dodd 211 601 31.03.03 Bradford & Bingley Rosemary Thorne 128 462 31.12.03 British Airways John Rishton 320 31.03.04 British American Tobacco Paul Rayner 600 1,253 31.12.03 British Land Co Graham Roberts 100 390 31.03.04 British Sky Broadcasting Group Martin Stewart (now Jeremy Darroch) 500 956 30.06.03 Bunzl David Williams 139 652 31.12.03 Cable & Wireless7 Charles Herlinger 126 278 31.03.04 Cadbury Schweppes8 David Kappler (now Ken Hanna) 174 684 28.12.03 Capita Group Gordon Hurst 120 305 31,12,03 Carnival9 Gerald Cahill n/a n/a 30.11.03 Centrica Phillip Bentley 376 843 31.12.03 Compass Group Andrew Lynch (now Andrew Martin) 510 1,033 30.09.03 Daily Mail & General Trust Peter Williams 362 28.09.03 Diageo Nick Rose 616 1,107 30.06.03 Dixons Group10 Jeremy Darroch (now Kevin O'Byrne) 414 01.05.04 Emap Gary Hughes 109 461 31.3.04 Enterprise Inns David George 72 428 30.09.03 Exel John Coghlan 236 658 31.12.03 Friends Provident11 Philip Moore 112 259 31.12.03 GUS David Tyler 420 858 31.03.04 Gallaher Group Mark Rolfe 170 726 31.12.03 GlaxoSmithKline John Coombe 730 1,237 31.12.03 HBOS Mike Ellis 216 757 31.12.03 HSBC Holdings Douglas Flint 450 1,057 31.12.03 Hanson Jonathan Nicholls 172 616 31.12.03 Hays John Martin 100 232 30.06.03 Hilton Group Brian Wallace 234 868 31.12.03 ITV12 Henry Staunton n/a n/a Imperial Chemical Industries Timothy Scott 139 516 31.12.03 Imperial Tobacco Group Robert Dyrbus 253 1,345 28.09.03 InterContintental Hotels Richard Solomons 232 497 31.12.03 Johnson Matthey John Sheldrick 138 467 31.03.04 Kingfisher13 Helen Weir (now Duncan Tatton- Brown) 263 644 31.01.04 Land Securities Group Andrew McFarlane 55 431 31.03.04 Legal & General Group Andrew Palmer 20 468 31.12.03 Liberty International Aiden Smith 80 306 31.12.03 Lloyds TSB Group14 Philip Hampton (now Helen Weir) 202 733 31.12.03 Man Group Peter Clarke 2,100 2,458 31.03.04 Marks & Spencer Group Alison Reed 388 03.04.04 mmO2 David Finch 364 931 31.03.04 Morrison (Wm) Supermarkets Martin Ackroyd 16 377 01.02.04 National Grid Transco Steve Lucas 217 611 31.3.04 Next David Keens 231 599 31.01.04 Northern Rock Bob Bennett 263 630 31.12.03 Old Mutual Julian Roberts 68 534 31.12.03 Pearson Rona Fairhead 116 493 31.12.03 Prudential Philip Broadley 255 750 31.12.03 Reckitt Benckiser Colin Day 870 1,353 31.12.03 Reed Elsevier Group plc Mark Armour 363 857 31.12.03 Rentokil Initial Roger Payne 11 491 31.12.03 Reuters Group David Grigson 314 785 31.12.03 Rexam Graham Chipchase 188 580 31.12.03 Rio Tinto Guy Elliott 255 678 31.12.03 Rolls-Royce Group Andrew Shilston 243 618 31.12.03 Royal & Sun Julian Hance Alliance (now George Culmer) 471 936 31.12.03 Royal Bank of Scotland Fred Watt 578 1,110 31.12.03 SABMiller Malcolm Wyman 315 907 31.03.04 Sage Group Paul Harrison 95 299 30.09.03 J Sainsbury Roger Matthews 178 652 27.03.04 Schroders15 Jonathan Asquith 600 793 31.12.03 Scottish & Newcastle16 Ian McHoul 122 366 31.12.03 Scottish & Southern Energy Gregor Alexander 86 277 31.03.04 Scottish Power David Nish 270 716 31.03.04 Severn Trent Alan Perelman 164 543 31.03.04 Shell Transport & Trading Co No FD 31.12.03 Shire Pharmaceuticals Group Angus Russell 162 499 31.12.03 Smith & Nephew Peter Hooley 259 586 31.12.03 Smiths Group Alan Thompson 183 688 31.07.03 Standard Chartered * Peter Sands 576 1,016 31.12.03 Tesco Andrew Higginson 1,084 1,659 28.02.04 Tomkins Ken Lever 337 733 03.01.04 Unilever Rudy Markham 116 728 31.12.03 United Utilities Simon Batey 190 526 31.03.04 Vodafone Group Ken Hydon 776 1,538 31.03.04 WPP Group Paul Richardson 281 825 31.12.03 Whitbread David Richardson 299 651 04.03.04 William Hill Tom Singer 113 373 30.12.03 Wolseley Stephen Webster 131 582 31.07.03 Xstrata Trevor Reid 331 993 31.12.03 Yell Group John Davis 340 702 31.03.04 Averages 289 716 Finance director Last Years year's in remun- post eration (000s) 3i Group Michael Queen 435 7 Abbey National1 Stephen Hester 623 2 Alliance & Leicester David Bennett 598 4 Alliance UniChem George Fairweather 331 2 Allied Domecq Graham Hetherington 747 5 Amvescap2 Robert McCullough (now James Robertson) 834 8 Anglo American Tony Lea 663 5 Antofagasta No FD Associated British Foods John Bason 458 5 AstraZeneca Jonathan Symonds 909 7 Aviva3 Mike Biggs (now Andrew Moss) 1,004 3 BAA Margaret Ewing 357 2 BAE Systems George Rose 495 6 BG Group Ashley Almanza 232 2 BHP Billiton* 4 Chris Lynch n/a 3 BOC Group Rene Medori 862 4 BP* Byron Grote 1,056 2 BT Group5 Ian Livingston 1,116 2 Barclays6 John Varley (now Naguib Kheraj) 668 4 Boots Group Howard Dodd 446 2 Bradford & Bingley Rosemary Thorne 482 4 British Airways John Rishton 256 3 British American Tobacco Paul Rayner 1,381 2 British Land Co Graham Roberts 389 2 British Sky Broadcasting Group Martin Stewart (now Jeremy Darroch) 713 6 Bunzl David Williams 597 13 Cable & Wireless7 Charles Herlinger n/a <1 Cadbury Schweppes8 David Kappler (now Ken Hanna) 844 9 Capita Group Gordon Hurst 292 7 Carnival9 Gerald Cahill n/a 1 Centrica Phillip Bentley 647 4 Compass Group Andrew Lynch (now Andrew Martin) 825 7 Daily Mail & General Trust Peter Williams 414 13 Diageo Nick Rose 1,259 5 Dixons Group10 Jeremy Darroch (now Kevin O'Byrne) 392 2 Emap Gary Hughes 489 4 Enterprise Inns David George 375 13 Exel John Coghlan 558 3 Friends Provident11 Philip Moore n/a <1 GUS David Tyler 778 7 Gallaher Group Mark Rolfe 571 4 GlaxoSmithKline John Coombe 947 12 HBOS Mike Ellis 759 3 HSBC Holdings Douglas Flint 960 9 Hanson Jonathan Nicholls 574 6 Hays John Martin n/a 1 Hilton Group Brian Wallace 726 9 ITV12 Henry Staunton 544 <1 Imperial Chemical Industries Timothy Scott 563 3 Imperial Tobacco Group Robert Dyrbus 1,046 8 InterContintental Hotels Richard Solomons n/a 1 Johnson Matthey John Sheldrick 426 9 Kingfisher13 Helen Weir (now Duncan Tatton- Brown) 910 4 Land Securities Group Andrew McFarlane 380 3 Legal & General Group Andrew Palmer 588 4 Liberty International Aiden Smith 281 6 Lloyds TSB Group14 Philip Hampton (now Helen Weir) 298 2 Man Group Peter Clarke 2,049 4 Marks & Spencer Group Alison Reed 695 3 mmO2 David Finch 734 3 Morrison (Wm) Supermarkets Martin Ackroyd 299 17 National Grid Transco Steve Lucas 497 2 Next David Keens 531 13 Northern Rock Bob Bennett 566 10 Old Mutual Julian Roberts 584 4 Pearson Rona Fairhead 301 2 Prudential Philip Broadley 619 4 Reckitt Benckiser Colin Day 950 4 Reed Elsevier Group plc Mark Armour 689 8 Rentokil Initial Roger Payne 591 3 Reuters Group David Grigson 690 4 Rexam Graham Chipchase n/a 1 Rio Tinto Guy Elliott 619 2 Rolls-Royce Group Andrew Shilston n/a 1 Royal & Sun Julian Hance Alliance (now George Culmer) 538 6 Royal Bank of Scotland Fred Watt 1,433 4 SABMiller Malcolm Wyman 755 3 Sage Group Paul Harrison 223 4 J Sainsbury Roger Matthews 632 5 Schroders15 Jonathan Asquith 1,135 2 Scottish & Newcastle16 Ian McHoul 426 3 Scottish & Southern Energy Gregor Alexander 140 2 Scottish Power David Nish 644 5 Severn Trent Alan Perelman 512 3 Shell Transport & Trading Co No FD Shire Pharmaceuticals Group Angus Russell 444 5 Smith & Nephew Peter Hooley 511 13 Smiths Group Alan Thompson 626 9 Standard Chartered * Peter Sands 636 2 Tesco Andrew Higginson 1,513 7 Tomkins Ken Lever 368 5 Unilever Rudy Markham 1,122 4 United Utilities Simon Batey 465 4 Vodafone Group Ken Hydon 1,582 19 WPP Group Paul Richardson 495 8 Whitbread David Richardson 498 8 William Hill Tom Singer 1,741 3 Wolseley Stephen Webster 439 10 Xstrata Trevor Reid 829 2 Yell Group John Davis 641 4 Averages 627 * converted from US$ at a rate of 1=$1.8 |
The survey is based on the latest available information in company annual reports, the Corporate Register, published by HS Financial Publishing, company websites and press offices.
• Survey research and reporting by Liz Fisher.