The Observer: Top bosses see pension values soar

Heather Connon, investment editor

Sunday June 20, 2004

Bosses of the top 10 British companies saw the value of their pensions rise by an average of 1.2 times their salaries in 2003, leaving them with pots worth an average £8.2 million.

According to a survey conducted for The Observer by Independent Remuneration Solutions, the biggest winners last year were Sir Philip Watts, ousted as chairman of managing directors of Shell earlier this year; Sir John Bond, executive chairman of HSBC, and James Crosby, HBOS chief executive, who saw the value of their pension pots rise by £2.06 million, £2.42 million and £1.89 million, respectively, last year alone - roughly equal to 2.5 times their annual salary.

The biggest pension among the top 10 companies belongs to Sir Christopher Gent, who took a £15.5 million pot when he retired from Vodafone. It had doubled in value in just three years, reflecting a trebling of his salary between 1997 and 2003.

Watts at Shell also saw his pot rise by £2m to £10m as his salary rose by almost 70 per cent between 2000 and 2003. Watts was ousted after Shell made a series of downgrades to its reserves estimates and embarked on a comprehensive review of its governance procedures.

The scale of the pension increases will add to concerns among leading investors about the soaring cost of retirement provision.

Robert Talbut at Isis is particularly concerned about large pay rises being awarded to executives in the years leading up to their retirement while fund managers at Morley have criticised schemes that give directors more generous terms than their employees.

The government is imposing a £1.6 million cap on the value of pension pots, but this does not come into operation until 6 April 2006.

http://observer.guardian.co.uk/business/story/0,6903,1242806,00.html