Top UK bosses earn almost £3 million a year

The average total pay of Britain's top chief executives has risen to almost £3 million in the past year, a report showed, potentially rekindling criticism of "fat cat" deals for company bosses.

Even before adding bonuses, pensions and other incentives, pay for chief executives of companies in the blue chip FTSE 100 index rose 7.1 per cent over the year, the report found, around double the rise in the average worker's pay.

The survey by executive pay specialists Watson Wyatt showed that typical bonus plans of FTSE 100 companies pay chief executives 85 per cent of salary for reaching targets and as much as 150 per cent of salary for better than expected results.

"The strong performance of UK businesses is a significant contributor to bigger executive bonuses, and suggests that the continued move towards `pay for performance' is having a positive impact," said Watson Wyatt executive reward expert Sue Bartlett.

"Companies are increasing the maximum size of bonuses payable and the amounts payable for on-target performance," Ms Bartlett said.

A stable UK economy and improved performances by firms has helped drive the FTSE 100 index 11 per cent higher over the last 12 months.

"Salary is far from the whole story," added Ms Bartlett. "For CEOs, it typically accounts for only 40 per cent of the total value of the package if you include long-term incentives and pensions."

CEOs may feel they are receiving a raw deal, however, as their second-in-commands saw their pay rise at a faster rate.

The median pay increase for FTSE 100 finance directors grew 9.4 per cent over the year, while other board directors saw their pay shoot up 8.4 per cent.