Unions could sour fat cat cream

FAT CAT directors in the UK's 100 top companies enjoyed a 50% average pay rise over the past four years - and raked in average annual bonuses worth an astonishing 77% of salary.

The pay analysis, by corporate governance specialist PIRC, also showed bosses benefiting from more lucrative share option schemes. In 1997, 82% of executive option schemes had a limit of four times salary over 10 years. In 2001, directors could earn up to twice their salary each year.

PIRC managing director Alan MacDougall said trade unions should mobilise members who own shares to object at annual meetings. This could be 'a considerable lever of influence'.

Separately, the TUC revealed that directors' basic pay rises outstripped workers by three-to-one over seven years. The average annual salary and bonus for the highest paid director grew from £201,000 in 1994 to £416,000 in 2001, an increase of 107%. Average employee pay in the same companies rose 31% from £19,272 to £25,223. PIRC says shareholders' protests over directors' pay and perks are increasing. But fewer than 7% of investors voted against company bonus schemes and option plans last year.

Some pay plans did provoke fierce opposition. Furniture group DFS saw its proposals thrown out by 54% of investors, while 29% objected at Reuters and Cable & Wireless.

Stuart Bell, research director at PIRC, said: 'It appears inadequate numbers of institutions are scrutinising pay and voting regularly. Shareholder resources put into remuneration analysis do not match companies.'

PIRC backs Government plans to give investors power to block fat cat pay through a new voting right on remuneration reports, due in 2003. At a PIRC conference, Ian Talbot, investment manager at the London borough of Croydon, said it had voted against board proposals at Sir Chris Gent's Vodafone, as well as at Invensys, Scottish Power, Kingfisher and Dixons.