Chief execs take too much cream

By Christina Golding

Chief executives in the hospitality industry earn 231/2 times as much as their employees on average, but a new report has found that many bosses' salaries are not justified by company performance.

An independent study of 20 major players has revealed that the average pay for chief executives in 1996-97, including benefits but not share options, was £465,129. Smaller companies, where turnover was less than £100m, paid between £54,000 and £140,000.

The study, by consultant Janet Salmon, also shows that some of the big raises by far exceeded increases in company profits, in percentage terms.

Bass, despite a 29% profits drop compared to the previous year, awarded chairman and chief executive Ian Prosser a rise of 15%. Stakis's David Michels received a 22% pay rise to £210,000 although profits rose by only 13%, and Allied Domecq's profits increased by just 4.7% against an 11% rise for Tony Hales.

Excluding bonuses, the biggest pay differential was at Granada, where chief executive Charles Allen took home a salary 64 times that of the average employee. In February, directors were met outside the company's annual general meeting by staff protesting their own mere 3.7% rise. However, Allen's 18% pay increase did reflect a profits rise of 35%.

Whitbread's Peter Jarvis, now retired, was paid £420,449, about 53 times the group's average salary.

By contrast, Scottish Highlands Hotels paid its chief executive only five times the average employee's salary, and Thistle Hotels six times.

It also emerged that Friendly Hotels' Henry Edwards, who was chairman and chief executive, paid himself a salary of just £27,000, although he does have a 20% share in the company. Friendly has since appointed Tony Potter chief executive on a salary of £145,000.