"Fat cat" bosses face leaner times

Incomes Data Services (IDS) found salary increases in the boardroom averaged 2.8% between April and June, down from 4% in the previous three months.

The figure is also below the 2.9% rate of inflation - one of the few times in recent history that bosses have accepted what amounts to a cut in real income.

But public sector managers did better, with average pay rises of about 4.4%, well above inflation.

The survey of more than 70,000 managers and professionals also found growing evidence that business chiefs are accepting pay freezes.

Freeze

While no pay freezes were recorded in the first three months of the year, about 10% of those polled in the latest survey got no pay rise.

IDS said pay awards for managers and directors were "decelerating at all levels and across all industry groups".

IDS Management Pay Review Editor Steve Tatton said: "Obviously the greater attention on executive pay maybe had some effect, and the whole economy has been slightly depressed."

Management pay awards are following the same downward trend of the economy Richard Dodd, CBI

He added that institutional investors are "more active than ever before" which had encouraged the government to consider taking action to curb excessive pay.

However, Mr Tatton did sound a word of warning.

He noted that while actual pay rises had slowed, incentive packages were increasingly being used to boost director pay.

Meanwhile, the Confederation of British Industry (CBI) said the survey did not mean the end of "fat cats".

Spokesman Richard Dodd said: "The survey is actually very much in line with our own pay survey a few months ago.

Pressures

"Service sector pay awards were down to their lowest level in nine years, and that is reflected in this survey.

"It's the result of very low inflationary pressures. Management pay awards are following the same downward trend of the economy."

'FAT CATS IN THE SPOTLIGHT GSK chief Jean-Pierre Garnier's �22m pay-off entitlement HSBC's �25m pay deal for director William Aldinger Tesco under fire for rolling two-year contracts for directors Reuters chief Tom Glocer paid a �612,000 bonus for 2002 even though the company was in the red by �493m

The findings come after years of huge pay increases that have fuelled claims of a "fat cat" culture in UK boardrooms.

Last week the CBI set out a series of proposals to stop underperforming executives walking away from their jobs with multi-million pound pay-offs.

CBI chief Digby Jones said at the time: "The over-riding drive is to re-establish the reputation of business, because we've got to get the trust of the general public back."

"We have to be seen to be getting our own house in order."

'Rewards for Failure'

The move came three months after the Department of Trade and Industry set out a range of options for tackling excessive pay-offs in a paper entitled Rewards for Failure.

A number of firms have become embroiled in fat cat rows, most recently Network Rail which awarded management bonuses as high as �451,000, even though directors missed up to 83% of their targets.

Other firms to have become embroiled in high-profile disputes over executive pay include HSBC Bank, Reuters, Tesco and GlaxoSmithKline (GSK).

In May, GSK shareholders voted down a pay package that entitled chief executive Jean-Pierre Garnier to up to $35m (�22m) if he left the job early.

The opposition was fuelled partly by a slump in GSK's share price in the two-and-a-half years since Mr Garnier took over.