Who's top of the pay pile?

MT's latest bi-annual Global Salary Survey tracks down the best-rewarded execs - by role, region and sector. Andrew Saunders picks out some of the surprises.

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Last Updated: 31 Aug 2010

Spring may be the time when the sap rises and a young man's fancy lightly turns to thoughts of love. But be you male or female, by the time autumn rolls around and the summer holidays have maxed out your credit cards, such romantic notions have all too often been ousted by the urgent desire for a pay rise, or even a new and more handsomely remunerated job.

Enter the MT Global Salary Survey, our bi-annual research roundup of who earns how much for doing what, where, and whether they'd be better off doing it somewhere else. So, if you're considering a change to a more lucrative line of work, looking for ammunition to convince the boss that you're worth more than you're being paid, or even thinking of trying your hand in another country or continent, we put the financial facts at your fingertips.

Times have changed since the survey last filled these pages in July 2003, not least in America, the international setter of corporate trends for as long as anyone can remember. After Enron, WorldCom, Tyco, Martha Stewart and other US corporate scandals of recent years, there are signs that the land that invented the CEO-as-hero may be realising that even the most stellar of leaders can turn out to have feet of clay, or worse - as disgraced former WorldCom boss Bernie Ebbers has demonstrated. Having being convicted in July of fraud, conspiracy and filing false documents for his part in the firm's £6.2 billion collapse, he's now looking at a 25-year stretch of bad food, shared sleeping quarters and communal showers - all without the benefit of an English public school education to prepare him.

But even if US bosses don't get hero worship written into the contract any more, don't feel too sorry for them. Our figures show that they are still by far the best paid business leaders in the world. Our global benchmark CEO - the head of a mid-tier manufacturing company, so by no means the highest of the highly paid - collects a package worth a cool £1,427,081 for a year's graft if he or she is based in the States. That's nearly £250,000 more than they earned in 2003, and, amazingly, nearly 2.5 times as much as their nearest rivals in any other country in the survey.

On this side of the pond, the big news is that second place in our international bosses' pay league has changed hands for the first time since the survey began in 1999. For although our mid-market British chief executive is earning a respectable £115,459 more than he was two years ago, his £524,452 deal is beaten into third place by the very generous £603,912 stipend enjoyed by his German counterpart.

No, that's not a typo. The country branded by the Economist as the sick man of Europe - the only one in the EU where property prices have fallen in real terms over the past decade - really is paying its corporate bosses more than any other country in the continent. This fact is even more remarkable when you consider that in 2003, German CEOs were second from last in the table, on a meagre £278,360. So in the past two years they have enjoyed a pay rise of well over 200%.

Although the growing strength of the euro - recently introduced and rather sickly at the time of the last survey - must play a large part in this remarkable reversal of fortune, that is an eye-watering increase by any standards. It's certainly one that even the most unabashed of British fat cats would shudder at having to justify to shareholders at the AGM.

And there's the rub. If there has been a bit of pay restraint in some British boardrooms, it's largely down to fear of the consequences. The UK now has some of the toughest rules on pay disclosure in the world, and probably the bolshiest of institutional investors. Bosses who have taken on this formidable combination have generally come off worse: remember how GSK's JP Garnier had to back down after shareholder outrage over his proposed £35 million package a couple of years ago?

'There's a feeling that shareholders have achieved all they can here, and that they're now looking to Europe for their next round of activism,' says Mark Reid, head of the UK compensation practice at pay consultancy Towers Perrin. 'The regulations on pay disclosure across Europe are much more variable than they are in the UK. In many cases they are today where we were 10 years ago, just after the Greenbury Report.'

But we Brits are a resourceful bunch, especially when it comes to whingeing.

Deprived by this uncharacteristic bout of fiscal modesty of a favourite source of moral outrage, we have simply identified another - the public sector. It might sound unlikely, but the taxpayer-funded section of the national economy is the latest to come under the scrutiny of the pay police.

Two stories got this going in 2005. The first was the news that Royal Mail CEO Adam Crozier was to receive a pocket-stretching performance bonus of £2.2 million. On top of his £515,000 basic salary (making him one of the best-paid bosses in the public sector), this took Crozier to within sight of the £3 million package enjoyed by that darling of the private sector, Tesco's Sir Terry Leahy. Now, it can't be denied that Crozier (with the help of chairman Allan Leighton) has done a pretty solid job on the numbers at the Post Office, turning daily losses of £1.5 million in 2002 into a £2 million-a-day profit in 2004. But many Royal Mail customers - especially those whose post now arrives after lunch instead of before breakfast - didn't feel the same could be said of the service.

The second was July's furore over bonuses totalling £550,000 paid to top BBC managers at a time when the corporation was planning 4,000 redundancies.

The fact that director general Mark Thompson didn't take his bonus failed to quell staff anger - he earns a robust basic salary of £453,000, nearly £100,000 more than his ousted predecessor Greg Dyke.

'There's undoubtedly salary inflation at senior levels in the public sector,' says Hamish Davidson of Rockpools, a headhunter specialising in top public-sector appointments. The inflation is caused partly, he says, by the influx of private-sector executives into public-sector jobs - people like Royal Mail's Crozier and John Armitt at Network Rail, who after years in the commercial sector have a well-developed sense of what they're worth in the job market. It's then exacerbated by skills shortages.

'The public sector has trouble finding people of high enough calibre with the right skills,' adds Davidson, 'so there's a greater readiness to look at people both from the private sector and from abroad - Bob Kylie at Transport for London is a good example. We will see more of this in the Olympic bid delivery team, too.'

Among job ads in the national press it's not hard to find public-sector positions advertised with salaries in excess of £100,000. And some job titles make you wonder just what all that money is for. The Isle of Wight Council is apparently so in need of a strategic director of adult and community services that it will pay the successful candidate a six-figure salary.

Virtually the same job (corporate rather than strategic director) in another, less desirable coastal locale - Hartlepool - has a £105,000 ticket attached. Similarly, the next lucky corporate director of the London Borough of Hackney will get £126,000 for his or her travails.

The increasing crossover from the private sector is backed by government pressure for the public sector to become more 'commercial' in the way it operates. This has also increased the upward pressure on senior pay, as well as other devices familiar in the private sector, such as bonus payments. 'Bonuses in the public sector are on the rise,' says Davidson. 'As organisations become more desperate to hang on to their people they'll have little choice.'

But without careful controls and properly thought out measurement, bonuses - by definition intended as exceptional payments for exceptional performance - can end up looking like a back-door way to boost salaries. And deciding what those performance measures should be can be tricky in the public sector, where the emphasis is more often on service than on the bottom line. FTSE-100 pay practice is not automatically the best choice in the more subjective and complex world of the public sector, as the BBC bonus row demonstrated.

But it's not just the generals at public-sector HQ whose salaries are grabbing the headlines. The story is much the same in the trenches. Figures released by the Office for National Statistics show that for workers paid an hourly rate, mean hourly earnings in the public sector now run at £12.59 - 65p an hour more than the hourly earnings of those in the private sector.

Despite often being paid more, public-sector workers don't seem to be a contented bunch. They take an average of nearly 10.5 sick days each per year - getting on for four days more than private-sector services workers. They are also more likely than either private or voluntary-sector workers to cite stress as a major cause of absenteeism.

And all this is before you get to what has been called the 'elephant in the room' - the public-sector pensions crisis. The index-linked, copper-bottomed pension has for generations been one of the cornerstones of the public-sector employment deal - what is known in HR parlance as the 'psychological contract'. You may get paid less well and have fewer opportunities for individual advancement, goes the mantra, but, boy, just look at that pension!

Add to that the fact that all those public-sector workers are voters, too, and it's easy to see why pension reform - now well advanced in the private sector - has been slow to start in the taxpayer-funded economy.

There are now more public-sector workers in final salary pensions schemes than private-sector ones, despite the fact that the public sector accounts for only 18% of total employment. It is also responsible for a disproportionate near-40% of total accrued pensions rights. 'The pension is still a huge draw to the public sector,' says Davidson. 'At senior levels, the schemes are still index-linked and final-salary, but there have to be questions about the affordability of this in the longer term.'

There certainly do. A recent independent estimate of the pension deficit in the public sector put the figure at a sobering £690 billion - that's £11,000 for every man, woman and child in the country. But all those doctors, nurses, police officers and firemen and women are voters, too. Which government is going to sign its own death warrant by slashing their pension rights?

But there is no doubt that the bosses of Britain's biggest private companies are still the nation's leading business earners by a very comfortable margin, as our table of FTSE Top 10 pay deals shows. Who in the public sector could compete with Lord Browne's £8 million-plus total package last year?

'Public-sector salaries will never match the biggest private-sector ones,' says Davidson. 'And would we want them to?'

THE GLOBAL MARKET PLACE

As ever, the US tops the salary league for corporate bosses, with 2.5 times the remuneration of its nearest rival. For the first time in six years, Germany beats Britain into second place, but shareholder activists are heading its way

THE PACKAGE (pounds pa) Chief executive US 1,427,081 Germany 603,912 UK 524,452 France 465,154 Sweden 442,719 India 142,758 China 57,533 Source: Towers Perrin HR director US 325,900 Germany 247,619 UK 227,327 France 188,690 Sweden 163,672 India 56,856 China 38,620 Source: Towers Perrin Accountant UK 63,973 France 55,724 Germany 48,718 US 48,616 Sweden 41,965 China 10,907 India 10,177 Source: Towers Perrin Manufacturing worker US 32,437 Germany 28,311 France 26,999 Sweden 25,171 UK 18,780 China 2,654 India 2,516 Source: Towers Perrin THE TAXMAN COMETH MAXIMUM INCOME TAX RATE (%) Sweden 56.0 Germany 51.2 France 49.6 US 49.1 China 45.0 UK 40.0 Source: Towers Perrin BONUS CULTURE BONUSES AND INCENTIVES AS PROPORTION OF TOTAL CEO PAY (%) US 87 France 71 Belgium 63 Switzerland 60 UK 55 Netherlands 55 Source: Towers Perrin THE GOLD BULLET TYPICAL REDUNDANCY PAY AS PROPORTION OF MANUFACTURING WORKER'S SALARY (%) China 108 India 67 UK 57 Germany 56 Sweden 50 US 30 France 25 India 0 Source: Towers Perrin THE GOLD WATCH CEO RETIREMENT INCOME AS PROPORTION OF FINAL SALARY (%) Sweden 63 India 59 UK 58 US 55 France 35 Germany 31 China 3 Source: Towers Perrin PAYRISE PROSPECTS PROJECTED 2005 NATIONAL PAY INCREASE (% ABOVE INFLATION) India 7.2 Italy 2.1 UK 1.6 France 1.5 Sweden 1.1 Germany 0.8 US 0.4 Source: Mercer 2005 worldwide pay survey

PUBLIC vs PRIVATE SECTORS

Pressure on the public sector to commercialise is leading to big salaries and better bonuses for the bosses who spend UK taxpayers' money.

It's not just the generals who do well either; many publicly funded footsoldiers do better than their counterparts in the world of free enterprise.

PRIVATE SECTOR FTSE top 10 boss' salaries, 2004 (pounds pa) BASIC TOTAL PKGE (pounds m) (pounds m)* Lord Browne, CEO, BP 1.415 8.180 John Bond, chairman, HSBC 1.276 4.632 Arun Sarin, CEO, Vodafone 1.010 5.060 JP Garnier, CEO, GlaxoSmithKline 0.812 4.767 Jeroen van der Veer, group CEO, Royal Dutch Shell 1.049 4.373 Fred Goodwin, CEO, RBS 0.99 2.581 Tom McKillop, CEO, AstraZeneca 1.370 3.393 John Varley, CEO, Barclays 0.850 2.706 James Crosby, CEO, HBOS 0.825 2.142 J Eric Daniels, CEO, Lloyds TSB 0.825 2.333 *Direct compensation - basic, target bonus and expected value of LTIPs Source: FTSE/individual annual reports/remuneration committee reports PUBLIC SECTOR The operators BASIC SALARY (pounds pa) Adam Crozier, chief executive, Royal Mail 515,000 (plus £2.2m bonus) John Armitt, chief executive, Network Rail 480,000* (919,000 inc. pensions and benefits) Mark Thompson, director general, BBC 453,000 Sir Andrew Turnbull, cabinet secretary 220,000* Sir Ian Blair, Commissioner, Metropolitan Police 215,000 Jonathan Michael, CEO, Guys & St Thomas's NHS Trust 214,000* Lord Woolf, Lord Chief Justice 205,242* Nigel Crisp, CEO, NHS 195,000 Sir Michael Walker, chief of the defence staff 189,000 Phil Wheatley, director general, Prison Service 130,000 *Figures for 2004-05, otherwise 2003-04 Source: Individual annual reports/statements, Incomes Data Services PUBLIC SECTOR The regulators BASIC SALARY (pounds pa) John Tiner, CEO, FSA 365,000 (540,242 inc. pension and benefits) Stephen Carter, CEO, Ofcom 267,500 (414,463 inc pension and benefits) Alistair Buchanan, CEO, Ofgem 175,000 Philip Fletcher, director general water services, Ofwat 165,000 David Bell, HM chief inspector of schools, Ofsted 150,000 Martin Stanley, CEO, Competition Commission 123,000 Figures for 2004-05 Source: annual reports, Incomes Data Services FRONT LINE Public vs private sector workers' pay PUBLIC PRIVATE (pounds) (pounds) Mean hourly earnings 12.59 11.94 Mean weekly earnings 402.20 429.80 Source: Office for National Statistics. ABSENTEEISM WORKING DAYS LOST TO ABSENCE PER EMPLOYEE PA Public sector Health 11.6 Local government (inc police & fire services) 10.9 Education 9.8 Central government 9.3 Average, all public sector 10.3 Private services Legal & property 5.2 Financial services 5.7 Call centres 8.0 Retail 8.7 Average, all private services 6.8 Source: Chartered Institute of Personnel & Development.

WOULD YOU DO BETTER ABROAD?

Life at the top of the company heap gets tougher all over the globe, as shrinking CEO tenures demonstrate. The US and the UK have the most millionaires, but the growth in high net worth individuals is fastest in Singapore and South Africa

BE YOUR OWN BOSS PROPORTION OF WORKING POPULATION INVOLVED IN ENTREPRENEURIAL ACTIVITY US 11.3% Ireland 7.7% UK 6.3% France 6.0% Germany 4.5% Italy 4.3% Sweden 3.7% Japan 1.5% Source: Global Entrepreneurship Monitor TOUGHER AT THE TOP MEAN TENURES OF DEPARTING CEOs (Years) 1998 2004 North America 10.2 8.8 Europe 7.2 5.6 Japan 6.9 6.1 Asia Pacific 6.5 4.9 Global average 8.6 6.6 Source: Booz Allen Hamilton. MILLIONAIRE HOTHOUSES INDIVIDUALS WORTH AT LEAST $1M TOTAL GROWTH '03-04 (%) US 2.49m 9.9 UK 418,000 8.9 Spain 141,000 8.7 Australia 134,000 14.8 South Korea 71,000 10.5 India 70,000 14.6 Hong Kong 67,000 18.8 Singapore 49,000 22.4 South Africa 37,000 21.6 Excluding value of primary residence. Source: Merrill Lynch/Cap Gemini. COMFORT ZONE THE WORLD'S SAFEST CITIES SAFETY INDEX Luxembourg 122.5 Helsinki 120.0 Tokyo 109.0 Glasgow 106.5 New York 100.0 London 99.0 Budapest 95.5 Safety and security index relative to New York's base score of 100 Source: Mercer Human Resource Consulting.

ON THE HOME FRONT

British managers' earnings are up across the board, and the average bonus now stands at more than 10% of basic salary. Pay equality between the sexes remains a myth - women are still earning up to 22% less than their male colleagues.

MANAGER'S EARNINGS BY REGION (pounds ) Inner London 55,653 Outer London 48,741 Scotland 45,107 South East 44,923 North West 44,340 North & North East 42,516 South West & Wales 40,914 Midlands 40,126 Average bonus 4,530* *10.4% of basic. Source: Chartered Management Institute. SELLER'S MARKET PROPORTION OF COMPANIES WITH RECRUITMENT/RETENTION PROBLEMS RECRUITMENT (%) RETENTION (%) 2005 43.4 45.4 2003 42.6 28 2001 33.8 21.1 Source: Chartered Management Institute. GENDER GAP FEMALE MANAGER'S EARNINGS BY REGION AS PROPORTION OF MALE EQUIVALENT (%) North & North East 86.8 Outer London 86.1 Midlands 85.7 South West & Wales 85.3 South East 85.2 North West 83.9 Inner London 81.6 Scotland 77.5 Source: Chartered Management Institute. THE ETHNIC ECONOMY PROPORTION OF ALL UK WORKING-AGE HOUSEHOLDS WITH NO ADULT IN EMPLOYMENT (%) Black African 34.3 Pakistani/Bangladeshi 31.7 Black Caribbean 26.2 Mixed-race 23.4 Chinese 23.3 White 15.8 Indian 10.3 Source: ONS

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