The scale of pay packages being handed out by the UK’s biggest companies was underlined when Prudential revealed its highest-paid employee received £15.4m last year – more than the insurer’s outgoing boss Tidjane Thiam.
Thiam received an £11.8m cash and shares payout for 2014, the insurer said, on a day when pay awards to other top bosses were also published. Rakesh Kapoor, the boss of Nurofen and Dettol-maker Reckitt Benckiser received £11.2m while bookmaker Ladbrokes revealed it was paying its former boss Richard Glynn £846,000 in “damages”, more than £650,000 in shares and picking up the bill for the CCTV protecting his home.
The pay of the Pru boss – who quit two weeks ago to run Swiss bank Credit Suisse – was eclipsed by the insurer’s bond fund manager Richard Woolnough, who is the executive understood to have received the £15.4m.
Pru would not confirm that Woolnough was again the highest-paid employee – he received £17.5m a year ago – as it does not have to identify the pay of any employee outside the boardroom. Woolnough runs three of M&G’s flagship funds, including the M&G optimal income fund.
The pay deals were being announced ahead of the annual general meeting season when all the major companies on the stock market – such as Barclays, HSBC and BP – put their bonus schemes to a shareholder vote. This year’s season takes place against the backdrop of campaigning by politicians for the general election on 7 May. Politicians such as Vince Cable have pinned their hopes on fund managers such as M&G voting against egregious pay deals when they cast their votes during AGMs.
Pru faced a total bill of nearly £50m to pay its boardroom directors last year. After Thiam, the highest paid director is Mike Wells, head of the US business who sits on the board and received £11.4m. He is regarded as a potential successor for Thiam, who is quitting after the annual meeting next month.
Usually companies in the UK only have to reveal the pay of boardroom directors although those with shares in Hong Kong – such as Pru and HSBC – also have to provide details of the five highest-paid staff, without naming them. Two other unnamed Pru employees received £7.6m and £5.9m.
The boss of M&G, Michael McLintock, who also sits on the board of Pru, received £5.5m last year.
Thiam’s £11.8m compares with £8.7m a year ago and has increased because of a long-term incentive plan from three years ago which Pru valued at £8.2m in its annual report. But when the shares in that Ltip were actually released to Thiam on Tuesday, they were worth £9.6m as they were worth £16.90 each compared with the £14.50 used for the formal calculation in the annual report.
Lord Turnbull, the former boss of the civil service who chairs the remuneration committee, defended the pay awards by saying Pru had outperformed its rivals. “£100 invested in Prudential on 1 January 2012 was worth £257 on 31 December 2014,” Turnbull said.
The Pru chairman Paul Manduca is also getting a £100,000 rise in his fee to £700,000 from July. Directors were getting a 3% salary rise, Turnbull said.
At Reckitt Benckiser, the chair of the remuneration committee Judy Sprieser said the pay deals needed to be considered in the context of the share performance of the company. £100 invested in January 2000 was worth £1,397 in December 2014, compared with growth in the FTSE 100 index to £158.
Kapoor – who took over from long-serving boss Bart Becht in 2011 – receives a £865,000 salary with his total bolstered by a £7.4m payout in shares from his long-term incentive plan, which has risen in value by £4.7m since it was awarded three years ago because of a rise in the share price.
Ladbrokes issued a 13-point statement on the departure terms for Glynn, who left after five years on Tuesday. His goodbye package includes £580,000, the equivalent of one-year’s pay, £131,000 in pension contributions, a £10,000 car allowance, £24,000 in healthcare insurance and £1,000 for mobile phone bills. The bookmaker will also pay up to £60,000 plus VAT for “outplacement counselling services”, up to £10,000 plus VAT in legal fees and will continue to provide CCTV security at Glynn’s home for an unspecified time.
Glynn is also being allowed to keep some of the shares he was awarded in previous years and is due to cash in around £569,000 in August, part of a controversial long-term incentive scheme, the Ladbrokes growth plan. Once a £87,500 share award that pays out in May is included, he will pick up around £657,000 in shares in 2015. In 2020 he may cash in options on almost 1.2m shares, which were worth £1.7m when first awarded in 2010.
Bailed out Lloyds Banking Group also revealed that George Culmer was handed £3.4m in shares, part of a package he was awarded when he was hired as finance director from Royal & Sun Alliance in 2012. The value of the buyout has increased because Lloyds shares have more than doubled since they were awarded.
This article was written by Jill Treanor and Jennifer Rankin, for theguardian.com on Tuesday 31st March 2015 19.22 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010