Peter Jackson column

May 19 2005 By Peter Jackson, The Journal

Do you remember fat cat pay deals? Those enormous remuneration packages certain chief executives of certain public companies rewarded themselves with in the 1990s.

They stirred much anger among small shareholders and among the public in general - and rightly so - particularly when the companies involved were former nationalised utilities or when the performance of the executives involved had not been especially shining.

It must have been irksome, to say the least, if you had been refused a pay increase, told to tighten your belt, or even been made redundant, to see the man in charge walking away with suitcases stuffed with cash.

Huge executive pay packages haven't gone away, of course. Far from it, but they hardly seem to arouse the kind of fury they once did. No pigs at agms these days.

I wondered about this when I opened yesterday's business pages. First I saw the story that Tesco chief executive Sir Terry Leahy saw his pay jump some 7% to almost £3.2m in the last financial year. Then, my eyes were attracted by the news that Royal Mail chief executive Adam Crozier has received a bonus of no less than £2.2m.

In both cases, however, when I read on, I found that these were by no means the old fat cat stories we grew to love and hate.

Sir Terry Leahy's nice little earner was part of £220m shared out among directors and staff through incentive bonuses and share schemes and nearly 150,000 staff shared £169m through the company's profit share and SAYE scheme.

And at Royal Mail, postal workers were each given bonuses of £1,074 after the company announced record annual profits of £537m, a 144pc rise on the previous year's £220m.

The point is a simple one - these big pay deals don't rankle nearly so much, or even at all, if the benefits of success are shared throughout the company. It seems to be a message that's sinking in.

It was similarly gratifying to see that Lord Hollick has decided to waive a £250,000 handover bonus from United Business Media, the company he left last week.

It only remains to be seen whether the chairman of Southampton FC Rupert Lowe will take the same 50% pay cut that will reportedly be inflicted on most of the players as a result of the club's relegation.

That, he has said, is a matter for the board.