Directors' pay grew at almost double the rate of the average workforce in 2006, a new study showed today.
The salary of directors at the UK's top 350 companies rose by an average seven per cent, compared to a 3.7 per cent increase in average earnings, a report by accountant Deloitte revealed.
"Increases for executive directors are still significantly ahead of those received by the general workforce," the report said.
The average chief executive of a FTSE 100 Index company earned around #850,000 in basic salary, although the lion's share of rewards at the UK's top companies come from bonuses and share options.
Potential bonuses for directors of FTSE 100 members were an average 130 per cent of salary - up from 115 per cent the year before - but the actual bonus payout rocketed from 75 per cent to 94 per cent of salary.
Deloitte director and remuneration specialist Sally Cooper said: "Many companies have enjoyed a period of sustained good performance and therefore the level of payout is perhaps unsurprising, but it is important that remuneration committees continue to monitor how performance is measured and ensure that the targets remain appropriately stretching."
She added: "The link between performance and reward must be clear - shareholders will expect to see a corresponding decrease in the payouts if company performance declines."
Directors of the UK's top 350 firms were typically granted share awards worth a potential 150 per cent of salary last year. These shares are linked to corporate performance, with directors gaining around 25 per cent of the shares on average for meeting minimum performance targets.
Although their pay and rewards are rising, the Deloitte survey also showed the number of directors among FTSE 350 firms declining for the fifth year in a row.
Companies have responded to new corporate governance guidelines by increasing independent representation on boards, while private equity firms have also tempted talent away.
Deloitte's head of remuneration Carol Arrowsmith said: "The competition from private equity puts increasing pressure on remuneration committees to ensure remuneration is structured to reward superior performance and to retain and motivate senior executives."
