Institute of Directors/Croner Reward, Directors Rewards Survey 2006
The Institute of Directors (IoD’s) annual Directors Rewards survey, carried out by Croner Reward, analysed 3,815 jobs from around 1,000 organisations. The results, published today, are based on evidence drawn from all sectors and size of company, rather than the usual staple of only FTSE 100 companies.
Commenting on the survey, Miles Templeman, Director General of the IoD said:
“It is right that directors pay is coming under ever increasing scrutiny but we need to highlight the clear distinction between the FTSE 100 and the vast majority of business which makes up ‘UK Plc’.
“SMEs form the lifeblood of the UK economy and our economic activity.
“The Reward survey demonstrates that, beyond the headlines, the reality of working life in Boardroom Britain is that average pay increases are moderate (3.2%), and directors are working longer hours. Significant numbers do not take their holiday entitlement and there are large disparities in regional pay. To add further cause for concern, the issue of the gender gap is not resolved.”
Gender Gap
The Rewards survey shows that female executives are still getting paid less than their male colleagues.
- A female director now earns an average of £60, 000 compared with the average male director’s basic pay of £74, 028.
- The biggest gaps appeared in the private services and voluntary sectors where female pay was 25% below that of their male counterparts.
- In the private sector, this means an average salary of £55, 000 for a female director compared with £74, 440 for a man.
- In the voluntary sector the average salary for female directors was £47, 840 compared with £64, 500 for a male director.
To make matters worse, the research shows that female managing directors in medium and large companies are actually working longer hours than their male counterparts – 51.25 hours per week, (compared with 50 hours for men in small to medium sized companies) and 57 hours a week compared to 55 in larger companies.
Laura Wolfe, Regional Director of the IoD in the North West said:
“Although there has been an overall decrease from 24% last year, to 19% this year, this is hardly grounds for celebration. Even those who break through the glass ceiling and reach board level will find there is another roof over their heads.
“The pay gap has often been justified on the basis that women work shorter hours. Our survey refutes that suggestion. Not only are women directors being paid less, they are also working longer hours.”
Regional Pay
The Rewards survey also found wide disparities of executive pay within different regions of the UK. London-based directors, for example, earn around a third more than their counterparts in Northern Ireland (£75, 000 compared with £55, 000).
In general, directors in the North West pay the average director 13% below the national rate, compared with East Midlands paying 3.2% more, Scotland 11% less and Northern Ireland 21% less than the national average.
Hours of Work and Holiday
The Rewards survey shows that around a quarter of business bosses are working in excess of 55 hours a week.
Directors also seldom take their full holiday entitlement. The average number of holidays not taken is 5. This increases to 10 days in small companies and to 8 in medium and large companies.
Andrew Walker, Business Director at Croner Reward said:
“Clients tell us that with ever increasing regulation and the extra burden that numerous legislative changes have placed on business, it is much harder to establish a meaningful work-life balance for many directors in small firms. Looking at the data in this year’s survey, the line between these two areas seems to have become more blurred than ever for many at the top of their chosen career.”
Non-Executive Directors
The Reward survey shows that large increases for non executive salaries have not been received by the majority of British non exec directors.
- In small companies, the average pay per day is £1, 020; for medium companies it is £867 and for those working in larger companies it is £2, 080.
- On average 24% of non-executive directors work unpaid.
- 42% of non-executives had no pay increase last year compared to 13% in 2005.
- Those non-executives who did receive a pay increase had an average of 3%.
Public Sector vs. Private Sector Pay
In 2005, managing directors in the public sector were paid less than those in financial services, private services and the manufacturing sector.
In 2006, the survey shows that they have now shot up to being the second highest paid managing directors, averaging £85, 000 a year. Managing directors in the financial services come out on top yet again on an average salary of £113, 450. Meanwhile, their counterparts in the manufacturing sector have seen their pay decrease by over £3,000.
Pay for all ‘other’ directors in financial services, private services, the manufacturing sector and voluntary services have all gone up from last year, apart from those working in the public sector who have seen a pay decrease from £70, 000 to £65,000 a year.
ENDS – 845 words
Contact Points:
Contact Points: Jane Harrad-Roberts, North West IoD Press Officer Mobile and out of hours: 07785 395705 Email: jane@marketingprojects.co.uk
Laura Wolfe, Regional Director North West Tel. 0161 209 3152 Mobile and out of hours: 07973 332564 Email. laura.wolfe@iod.com Web. www.iod.com/northwest
Notes to editors
To provide a perspective on the pay and benefits of directors, the following table has been produced to show the “package” for an average managing director in a company for each of the three sizes of companies in this report.
MANAGING DIRECTOR PACKAGES SMALLCOMPANY MEDIUMCOMPANY LARGECOMPANY Sales Turnover Range Up to £5M £5M to £50M £50M to £500M Basic Salary £66,560 £93,844 £131,359 Bonus and Dividend £20,000 £20,608 £41,000 Car Provided 44% 57% 53% Car Make MERCEDES BMW JAGUAR Taken Cash Alternative 36% 41% 42% Last Pay Increase 3.5% 3.5% 4% Forecast Pay Increase 4% 3.5% 4% Free Private Health Insurance 75% 95% 93% Type of Pension Scheme Individual Personal Pension (35%) Final Salary(21%) Final Salary(43%) Directors’ Contribution 5% 5-6% 5-6% Company Contribution 5-10% 5-14% 10-15% Holidays Taken 25 days pa (32%) 25 days pa (34%) 25 or 30 days pa (31% each) Retirement Age 61 63 61 Life Assurance 4 x Annual Salary 4 x Annual Salary 4 x Annual Salary Basis of Pay Review Performance (54%) Performance (62%) Performance (74%) Share Options No (83%) No (68%) No (79%) Hours Worked pw 46-50 (30%) 46-50 (37%) 51-55 (27%)
- Croner Reward, part of Wolters Kluwer (UK) Limited, is one of the UK’s leading pay and benefits consultancies. Our ongoing research into more than 60 remuneration surveys each year as well as a comprehensive consulting service offering a range of bespoke services including job evaluation, pay benchmarking and employee share schemes means we can assist with all aspects of a company’s reward management strategy. For more information visit www.croner-reward.co.uk.
- The IoD (Institute of Directors) was founded in 1903 and obtained a Royal Charter in 1906. The IoD is a non-party political organisation with upwards of 52,000 members in the United Kingdom and overseas. Membership includes directors from right across the business spectrum – from media to manufacturing, e-business to the public and voluntary sectors. Members include CEOs of large corporations as well as entrepreneurial directors of start-up companies.
- The IoD offers a wide range of business services which include business centre facilities (including ten UK regional centres [three in London, Reading, Bristol, Birmingham, Manchester, Nottingham, Edinburgh and Belfast] and one each in Paris and Brussels), conferences, networking events, issues-led guides and literature, as well as free access to business information and advisory services and a comprehensive Information Centre. The IoD places great emphasis on director development and has established a certified qualification for directors – Chartered Director – as well as running specific board-level and director-level training and individual career mentoring programmes.
- In addition, the IoD provides an effective voice to represent the interests of its members to government and key opinion-formers at the highest levels. These include ministers, constituency MPs, Select Committee members and senior civil servants. IoD policies and views are actively promoted to the national, regional and trade media.
- For further information, visit our website: www.iod.com
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