UK execs highest paid in Europe

By CNN's Graham Jones

LONDON, England (CNN) -- Magazine articles comparing executive pay in Britain traditionally come with the cheeky tease headline: "Are you getting enough?"

But after a rash of shareholders revolts against directors salaries and a survey revealing UK company executives are the highest paid in Europe, a more appropriate headline now would be: "Are they getting too much?"

A survey in the UK's "Management Today" revealed on Thursday that company executives in the UK are the highest paid in Europe, earning more than $143,000 a year more than their continental counterparts.

CEOs in Britain receive an average salary package of $727,000, an increase of 29 percent since 1999.

Research found that UK chief executives are paid a third more than their French counterparts and $286,000 a year more than executives in Sweden and Germany.

But manufacturing workers in Britain are the lowest-paid in the developed world, earning less than other skilled staff in Germany, France, Sweden, Japan or the United States.

Shop-floor workers earn an average salary of $29,237 in the UK, compared with $37,127 in Germany, $44,267 in the U.S. and $51,407 in Japan.

One surprising statistic was that qualified British accountants with five years in the business earn $108,526 in the UK. -- 55 percent more than their French equivalents and $41,880 more than an accountant would earn in the U.S.

The survey fuelled anger in Britain over what is being increasingly called "executive greed" -- especially when share prices have plummeted to their lowest level in three years.

On Wednesday mobile phone giant Vodafone was forced to promise to review directors' pay packages after shareholder anger over the amount of money paid to chief executive Sir Chris Gent last year -- a total of some $18.5 million.

Shareholders protested at the UK's third biggest company's annual general meeting described the directors as "arrogant" and "greedy" over a share option scheme awarding 28m shares to top executives over three years.

But chairman Lord McLaurin vigorously defended the amount of money paid to Vodafone directors, claiming it was on a par with packages paid to senior executives around the world.

The Vodafone shareholders' revolt was the latest in a series in Britain which had seen similar protests against the directors of Marconi, BT, Railtrack and Marks and Spencer.

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John Monks, general secretary of Britain's main trades union body, the Trades Union Congress, said: "With CEOs earning almost a third more than they were two years ago, fat cat pay shows no signs of letting up.

"That’s why we want the government to ensure remuneration committees have employee representation and to compel companies to justify pay packages to their AGMs including allowing for a separate vote on pay."

Christ Hirst, chief investment manager of the Cooperative Insurance Society, which manages £26 billion of shares for policyholders, said the pay of UK executives was getting "out of control."

The CIS recently carried out its own survey which showed that of Britain's top 100 (FTSE-100) companies, 60 percent were out of line with best practice over control and monitoring of directors' pay and bonuses.

Under an agreed code set by the London stock exchange (LSE), directors' pay should be controlled by a remuneration committee consisting only of independent non-executive directors.

Excutive pay consultants do not think board members of FTSE companies will soon be paid less.

Peter Jauhal of SCA Consulting told CNN that the problem was not the amount of money involved but the way companies inform their shareholders.

"I think the company that have talked to the institutions, spend a lot of time preparing the ground have found no problem putting in even very generous packages.

"Five years ago it was quite common for executives to have three year contracts, even five year contracts. So, that means if they were fired they would get three years pay or five years pay. Whereas now, most people are on one year contracts."

Analysts say more of the $2 million now paid to CEOs of FTSE companies may come in future the form of shares and not just share options so that CEOs feel the same pain as their shareholders.

But "Management Today" Editor Matthew Gwyther defended the high pay packages and said they were needed to attract top U.S. executive talent to Britain -- the magazine's survey showed American CEOs getting double that of their British counterparts at an average $1,417,947.

Gwyther told CNN: "CEOs should be paid well -- it's an increasingly international market these days.

"The highest ranking managers are willing to cross borders. They go from Europe to the States and indeed we get some very good people back from the States. You won't get those Americans to work for your company in Britain unless you pay the kind of money they get over there."

He added: "There has been a lot of talk in the last few weeks about fat cats. But a fat cat is OK provided it can still catch mice."