More cream for the fat cats

AFTER three years of crashing share prices, scandals, crises and spectacular bankruptcies, you might have thought that company boards would have toned down their excesses.

If so, think again. Many directors have carried on dishing out awards to each other as if nothing had happened.

Royal Bank of Scotland will unveil fat payouts this week. Chief executive Fred 'The Shred' Goodwin may have made up to £5.2m over the past year.

His pay and bonuses could be as high as £3.8m. Company documents show he has made a further £1.4m profits on shares and options received in previous years.

That brings his total from past awards to £6.8m. Goodwin, 44, also has a £2m pension pot.

It is barely a month since the bank revealed record profits of £7.1bn, but it is not just the banks making record profits that are handing out largesse. Abbey chief executive Luqman Arnold received £1.7m, while the bank lost £686m.

Global bank HSBC paid directors £12.3m last year, a 27% rise after record profits. Fund manager Schroders' chief executive Michael Dobson made £4.5m. Tom Glocer, at news group Reuters, got £1.9m plus options worth an estimated £10m.

The National Association of Pension Funds admits corporate governance in the City 'has a long way to go. There are still companies which aren't anywhere near best practice'.

But the NAPF argues that behaviour has improved. Institutional shareholders are clamping down on the worst excesses.

Three-year contracts have largely vanished. Glaxo was humiliated last year as investors rejected a package for chief executive Jean-Pierre Garnier potentially worth £22m. Nonetheless, as revealed here on Saturday, he is still likely to receive nearly £6m.

Our analysis shows big gains for directors elsewhere in the Footsie. Even before the latest pay figures are released, many directors are showing huge profits over a year on shares and options awarded previously.

At hedge fund manager Man Group, chief executive Stanley Fink is up £46m to £97m, Alain Levy, head of music at EMI, is ahead £12.1m to £20m, Peter Erskine, chief executive of mobile network mmO2, £2.7m to £3.2m. Marjorie Scardino, chief executive of media group Pearson, is up £1.5m to £5.9m.

Sir John Rose, chief executive of aero-engine group Rolls-Royce, is up £870,000 to £1.2m. He also receives pay and bonuses of £1.1m a year, and has a £5.3m pension pot. Last autumn ordinary staff had to accept pension cuts because of a crisis in the company scheme.

Directors' gains will be inflated by new awards made in the past 12 months. They undermine the boardroom claim that share and option awards 'align' directors' interests with those of shareholders.

When shares fall, ordinary investors lose hard-earned cash. When markets rally those who hung on - and were lucky - merely make back some of their losses.

But directors enjoy a double whammy. Options usually cost them nothing. As gamblers say, they are betting with the house's money.