08 Jan 2002
By Andrew Sawers
Fuelled by the dotcom boom and corporate restructuring, fiveFTSE-100 FDs have broken the £1m pay barrier to join Amvescap's RobertMcCullough. In this, the first instalment of our 2001 survey, we welcomesome new faces, bid adieu to Marconi and provide the definitive guide tobasics, big bonuses and benefits that created an average FTSE-100 FD paypackage of over £530,000 last financial year.
Total pay package
Somehow we doubt that Amvescap FD Robert McCullough is feeling too sorryfor himself. After all, having spent three years - 1998, 1999 and 2000 -at the top of the Financial Director FTSE-100 FD salary survey, it wasonly a question of time before some young whipper-snapper took hiscrown.
That young whipper-snapper turned out to be 56-year-old Vodafone FD KenHydon, whose work on the Mannesmann deal contributed to his £2.4m bonus(including a £426,000 short-term incentive payment), taking his total payto just over £3m.
Along with McCullough and Hydon, four FDs joined the millionaires'brigade: Peter Clarke, FD of commodity trader Man Group (formerly ED&FMan); Nicholas MacAndrew of Schroders; Diageo FD Nick Rose, who has apersonal deferred salary scheme which gave him an extra £175,000; and BP'sJohn Buchanan, who earned a £514,000 bonus following the acquisition ofArco.
Most FDs had to scrape along on £300,000-£600,000. Overall, basic salariesrose 9% and bonuses by 55%. Benefits slipped somewhat, from an average ofalmost £26,000 to just over £21,000.
Over the five years that we've been conducting this survey, FTSE-100 FDpay has, in aggregate, increased from £367,000 to £531,593 today(excluding the heavyweight Vodafone) - an average increase of 7.8% peryear.
Our survey is based on salary, benefits and annual bonus. We don'tcount profits from the exercise of share options, nor do we include LTips,payments into pension schemes or golden handshakes. We try to make anaccurate, consistent record of annual cash payments out of company coffersinto FD pockets.
UP AND DOWN
Last year's most lowly-paid FD, Capita's Gordon Hurst, was at the bottomagain this year. But he did at least make it into the top 10 fastestrisers, as his £125,000 package swelled 71% to £213,000 - thesecond-biggest percentage rise but still not enough to take him off thebottom of the table.
Vodafone's Ken Hydon pulled in a seven-digit bonus that almost quadrupledhis pay compared to the previous year, while Amvescap's Robert McCulloughadded to his formidible chart-topping performance with a 53% increase.Peter Anderson - shortlisted for the Accountancy Age Awards for ExcellenceFinancial Director of the Year award - probably didn't shed too big a tearat not winning the £500 prize: his success at steering bricks and mortarbusiness Canary Wharf into the FTSE-100 helped him pull in a 48% increasein total pay.
Kathleen O'Donovan at Invensys earned no bonus at all, leaving her withthe biggest fall in total pay.
Still our favourite measure of the trade-off between the energy of youthand the experience of long serving FDs. We divide the total pay package bythe FD's age to get a pay-per-year-of-age measure.
When we started this back in 1997, the average for a FTSE-100 FD was about£7,500 - now it's over £11,500. Top of the table is Vodafone's Ken Hydon,whose massive bonus takes him right to the top of the table. This is nolate flowering, however: Hydon was in the top 10 in this list last year,too. So, for that matter, was Marconi's John Mayo - but both he and hiscompany seem to have dropped off the radar.
Time has stood still for FTSE-100 FDs. The average age is slightly under48, just a little younger than last year, and two years less than it wasin our 1998 survey. Seven FDs are in their 30s (down from nine last year),but five more hit "the big four-oh" in this period.
Good luck to British Airways's Derek Stevens who retired in August at theage of 62 - and good luck to British Land's John Weston Smith, 69, astalwart of the property scene whose retirement was announced as we weregoing to press. That leaves no FDs in their 60s - probably for the firsttime ever.
Where has the young blood come from? FDs who were on the board when theircompany joined the FTSE-100 over the last year had an average age of 51;but new blood FDs who joined - or were promoted within - existing FTSE-100companies averaged just 44 years of age.
Bonuses brought home the bacon for FDs, with five of the six £1m-a-yearFDs getting into the seven-digit bracket thanks to bonuses that amountedto at least 50% of their total package.
Seven of the FDs in this table, in fact, had below-average basic salaries,supplemented by chunky short-term performance-related top-ups.
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