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Directors' pay up in economic slump

Directors of British companies received above-inflation pay rises last year despite the economic slowdown, research by Deloitte has shown.

The average increase for a FTSE company director was 6.2%, down from 7% the previous year, according to the accountancy firm’s research.

Stuart Cottee, head of tax for Deloitte in the North East, commented: “Executive salary increases during 2007 were still around 2% higher than increases in RPI and average earnings but we are starting to see the impact of a tougher economic climate on salary increases.”

In addition, one in four bosses also saw their bonus payment increase despite calls from the government for wage restraint, with the average sum between 70-80% of annual salary.

Stuart Cottee said: “One can think of many examples, particularly in the sporting world, of individuals with exceptional talent who can command a high premium. Previous economic downturns have demonstrated that there are talented leaders who can genuinely change the fortunes of businesses and we expect that 2008/09 will see companies focusing on finding, and retaining, those individuals.”

Deloitte also said many companies would have to rethink the level of executive pay in a tougher economic climate when shareholders would expect a much closer link between pay and performance.

This was posted in Bdaily's Members' News section by Ruth Mitchell .