Executive Pay – Surprises ?

Highest earning CEO Martin Sorrell of WPP earning £42.98m per year

Premier League footballers are paid huge amounts of money, the top salary these days being around £15 million a year. The argument being their time at the top is short and they generate huge amounts of income for their clubs through their star status.

How does this compare to the FTSE 100 CEO pay then. Well Premier League salaries are small fry compared to the big hitters of the FTSE 100. With top earner Martin Sorrell of WPP earning an eye watering £42.98 million in the last year he trumps second place Ben Ven Beurden of Shell at £19.51 million by quite a distance.

How do you justify the huge salaries these Chief Executives are taking out of our FTSE 100 companies ? Well their are a lot of jobs dependent upon them and they do carry much more responsibility than a footballer.
But you wonder about the performance related nature of their packages.

Here’s the top ten highest paid CEO ‘s in the FTSE 100:

Company CEO Total Annual Package
WPP Martin Sorrell £42.98m
Royal Dutch Shell Ben Van Beurden £19.51m
Relx Erik Engstrom £16.18m
TUI Group Peter Long £13.3m
Prudential Tidjane Thiam £11.83m
Lloyds Banking Group Antonio Horta Osorio £11.54m
Reckitt Benckiser Rakesh Kapoor £11.23m
Hargreaves Lansdown Ian Gorham £10.61m
Experian Don Robert £9.87m
BP Bob Dudley £9.29m

As a Chairman you are earning half the Chief Executive’s basic pay but however it is not a full time job, typically 2 or 3 days a week for a larger company. So the trick to make big earnings here is to see how many Chairmanships you can secure, depends on how many you can fit in in a week. The risk being from an investors perspective, how many Chairmanships has the Chairman fitted in, or in other words, how focused is he on the business in hand.

Retail

Company Executive Total Annual Package
Supergroup Euan Sutherland £1.67m

Builders

Company Executive Total Annual Package
Berkeley Group Tony Pidgley £21.5m
Berkeley Group Rob Perrins £11m

Finance

Bonus Bob pretty much led the way here for a while. Bob Diamond’s promotion to Barclays Chief Executive saw his annual salary package weigh in at a hefty £11.475 million.

Company Executive Job Title Total Annual Package Annual Salary Annual Bonus Annual Share Options
Barclays Bob Diamond Chief Executive £11.475m £1.35m £3.375m £6.75m
HSBC Stuart Gulliver Chief Executive £10.25m £1.25m £9m
RBS Stephen Hester Chief Executive £9.6m £1.2m £2m £6.4m
Lloyds Banking Group Antonio Horta-Osorio Chief Executive £8.315m £1.035m £2.93m £4.35m
Prudential Harvey McGrath Chairman £500k
Prudential Tidjane Thiam Chief Executive £7m £900k £3.4m £2.7m
Northern Rock Gary Hoffman Chief Executive £1.12m £700k £420k

Government

Often joingly referred to by bankers, how many times the Prime Minister’s salary they earn.

Job Title Annual Salary
Prime Minister £142k
Member of Parliament £60k

Senior Civil Servants

As well as getting final salary pensions, job security and bonuses too, Senior Civil Servants get paid substantially more than the Prime Minister they serve.

Name Job Title Annual Salary
John Fingleton Chief Executive Office of Fair Trading £280k
Sir Jock Stirrup Chief of Defence Staff £250k
Sir Gus O’Donnell Head of Civil Service £240k
Jeremy Beeton Director-General Olympics Committee £230k

BBC

Whilst funded by BBC licence payers Mark Thompson earns five times the Prime Minister’s salary and Roger Mosey earns almost two times the Prime Minister.

Name Job Title Annual Salary
Mark Thompson Director General £750k
Roger Mosey London 2012 Olympics £241,230

Retailers

Interesting observation here being Andy Hornby whose risk taking approach took HBOS and the country to the brink of bankruptcy. He has now landed a £1.7 million a year post running Boots. I personally will not be investing in Boots while he is running it.

Company Executive Job Title Annual Salary Annual Bonus Share Options
Asda Andy Bond Chief Executive £1.07 million
Boots Andy Hornby Chief Executive £1.7 million
M&S Stuart Rose Chairman £875k £630k
M&S Marc Bolland Chief Executive £975k £6.3 million £7.5 million
Sainsburys Justin King Chief Executive £2.05 million £3 million
Tesco Terry Leahy Chief Executive £1.3 million £3.9 million
Tesco Tim Mason Exec (Fresh and Easy) £4.2 million
Waitrose Mark Price Managing Director £830k

Telecoms

Company Executive Job Title Annual Salary Annual Bonus
BT Ian Livingstone Chief Executive £808,000 £1 million
BT Gavin Paterson Retail Director £502k bonus £400k
BT Tony Chanmugam Finance Director £475k £400k
Vodaphone Vittorio Colao £1.1m £1.3m
Vodaphone Sir John Bond Chairman £600k

Builders

Following the collapse of the housing market bonuses are under pressure from the shareholders for building firms.

Company Executive Job Title Annual Salary Annual Bonus Share Options
Bellway John Watson Chief Executive £500k £275k
Bellway Alistair Leitch Finance Director £325k £179k