Pay for British company chairmen should not be allowed to rocket in the same way that chief executive compensation has in recent years, the UK's biggest shareholder group and other large investors warn. Institutional investors have concentrated on CEOs and other top managers in questioning boardroom pay. But with rewards for some non-executive chairmen rising steeply, shareholders are keeping a close watch on their earnings. "There is a tendency for chairmen to seek more money and sometimes quite large increases," Peter Montagnon, director of investment affairs at the Association of British Insurers (ABI), told Reuters.
"The job is more demanding and we should take that into account, but this should not be a free-for-all," he added. ABI members manage more than 1 trillion pounds ($1.84 trillion) and about one-fifth of investments in the UK stock market.
The increases in part reflect the more onerous duties placed on chairmen by corporate governance rules in Britain and the United States following financial scandals such as the collapse of energy trader Enron.
"The demands on the chairman have gone up considerably. We are not too concerned about it but we would not want to see it (pay) accelerate further," said Tim Breedon, head of Legal & General Investment Management, the largest investor in UK stocks.
Total median pay for non-executive chairmen at companies valued at more than 10 billion pounds rose 4 percent last year, a survey by Independent Remuneration Solutions (IRS) shows. But while some got no rise, others received significantly bigger salaries, particularly those who were newly appointed.
Niall FitzGerald, chairman of Reuters Group, earns 500,000 pounds a year compared with 290,000 pounds paid to Sir Christopher Hogg, whom he replaced in October. Corporate governance group Pirc last month opposed Reuters' remuneration report, saying the company did not explain FitzGerald's pay.
A Reuters spokesman said Hogg, who served as chairman from 1985, left with a lump-sum pension payment of almost 2.3 million pounds, whereas FitzGerald does not get a pension. He added that the market for chairmen had changed because, under governance rules, individuals are not meant to chair more than one of Britain's blue chip FTSE 100 companies.
Barclays' Matt Barrett, who stepped up from CEO in September, gets 650,000 pounds salary a year for working 60 percent of what a full-time job would require - about the same rate as his CEO salary.
Barrett gets 100,000 pounds more than his predecessor at the bank, Sir Peter Middleton, whose salary jumped to 550,000 pounds in 2003 from 400,000 pounds two years earlier.
"There does seem to be a trend of whenever a new chairman is hired he or she is paid more than the previous one, although there are a few exceptions," said William Claxton-Smith, director of investor responsibility at Insight Investment.
Big-gaining incumbent chairmen include John Napier at insurer Royal & Sun Alliance, who got a 19 percent rise to 250,000 pounds in 2004 after a year in the job, and Rob Margetts at rival Legal & General, whose salary leapt 30 percent to 270,000 pounds last year.
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