Boardroom bonanza as city bosses rake in 37 per cent pay rise

Directors of Britain's top companies saw their pay soar 37 per cent last year, with chief executives receiving an average of £2,875,000 - a massive 98 times more than their employees.

The pay increase is 9-11 times the rate of growth in average earnings.

The survey of 1,389 directors of FTSE 100 companies shows they received a total of £1,013,076,577 last year as the country's top companies fleshed out inflation-busting directors' salaries with big bonuses and share option schemes.

Only 527 executive directors scooped £929million, most of it earned through annual bonuses and share schemes.

By contrast, basic pay rose at a more modest five per cent.

Bosses now take home 98 times more than their employees, up from 93 times a year ago.

TUC general secretary Brendan Barber accused top directors of "losing touch with reality" and said the growing pay gap was "morally offensive".

However, Miles Templeman, the director-general of the Institute of Directors, defended the pay rates saying, "exceptional performance should be rewarded".

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But fat-cat pay is continuing to rise and for 2005-06, pay rates for top executives rose at 28 per cent, an increase of 16 per cent on the previous year.

At the top, pay-outs are more than £20million with Barclays director Bob Diamond leading the field taking home £23 million - or 40 per cent of total boardroom rewards.

Mr Diamond earned only £250,000 in basic salary with a performance bonus adding £10million and share awards another £12million.

The select group with pay-outs of more than £20 million includes Anglo-Australian mining giant BHP Billiton, supermarket chain Tesco and oil exploration-group Cairn Energy.

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Standard Chartered Bank's Mervyn Davies was the best-paid chairman with a salary package of £4 million just a little ahead of Stephen Green of HSBC's £3.8 million.

At the other end of the scale was London-listed copper miner Antofagasta with boardroom pay-outs a modest £1.7million, and Kingsmill bread-maker Associated British Foods whose two directors were paid less than £2million.

But while financial services firms have some of the best-paid executives, they also have the flattest structure with executives paid around 11 times the average company salary.

The biggest differences can be seen with retailers and pubs. Tesco, Next, Punch Taverns, Sainsbury ' s and Morrisons all show great differences between the average pay and that of top bosses because they employ a large number of part-time workers.

The revelation is likely to spark angry debates over executive pay.

"It is impossible-to believe that top directors have become so much more productive than the rest of their staff over the last year," Mr Barber told the Guardian.

"This growing gap hits workforce morale, feeds through into house price inflation and threatens social cohesion. Britain's boardrooms are slowly losing touch with reality."