Directors at listed firms in the West Midlands have seen pay fall for the third consecutive year – despite new research showing chief executives of top firms have seen income soar 49 per cent in 12 months.
The average director of a main market listed firm in the West Midlands picked up £242,310 last year – down from £245,253 the year before and £253,090 in 2008 – as the tough economic climate hits the pay packets of the men and women at the top.
Research compiled by the Birmingham Post charting the remuneration of both executive and non-executive directors, but not taking long-term incentive plans into account, reveals that of the 25 firms, only six had executives earning more than £1 million.
This comes after it emerged that FTSE 100 directors have seen their total earnings increase by an average of 49 per cent in the last financial year, and are now averaging £2.7 million per annum.
John Rider, West Midlands chairman of the Institute of Directors, said the research showed that FTSE 100 companies did not reflect the average business in the West Midlands.
He said the majority of businesses in the region were SMEs, and directors were sharing the burden alongside their employees.
He said: “The FTSE 100 is a different planet to most companies, let alone a different world.
“These are huge, global businesses that are nothing like most in the West Midlands. There are 4.5 million private sector enterprises employing 22.5 million people and turning over £3.2 trillion and that is the world we live in in the West Midlands.
“In small, family-owned businesses, not a lot of directors have taken a pay rise in two or three years. They are living on the edge, with their fingers and toes and everything crossed.”
He added: “The average base pay for a director in the UK is about £70,000. That is the world we are living in. Lots of the workforce have taken a hit and lots of directors have taken a hit alongside them.”
Mr Rider said it would be “brilliant” news to see reports of directors’ pay rising in the West Midlands, as it would be evidence of growth in the region.
The three top-earning directors highlighted in the Post’s research were Enterprise Inns’ Ted Tuppen on £1.22 million, Sir Kevin Smith from GKN on £1.19 million and Mitchells and Butlers’ Adam Fowle on £1.15 million, but the vast majority of firms did not have a £1 million-plus earner.
The fall in pay for directors is keeping pace with the level of revenue at the companies. The 25 main market-listed firms turned over £21.7 billion in 2010, down from £22.3 billion the year before and £22.7 billion in 2008.
However, this is not the case across the board in the FTSE 100, where a report by Income Data Services shows top executives have seen a 43 per cent pay rise for chief executives and 49 per cent for directors en masse.
FTSE 100 directors saw their average bonus payments increase by 23 per cent, from £737,624 in 2010 to £906,044 in 2011. Steve Tatton, editor of the IDS report, said: “Britain’s economy may be struggling to return to pre-recession levels of output, but the same cannot be said of FTSE 100 directors’ remuneration.”
According to the IDS data, the increase in long-term incentive plans and bonus payments received by FTSE 100 directors more than made up for a modest 3.2 per cent growth in base salary that FTSE 100 directors averaged over the last year.
Researchers found that chief executives received an average of £3.85 million, finance directors earned £2 million on average and other directors averaged at £2.2 million.
AVERAGE PAY FOR DIRECTORS
*Only companies which have filed completed 2011 annual reports are shown