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What your boss earns

Consultants' salaries - Performance related bonuses raised the salaries of many of the UK's highest paid consultants in 2004. Andrew Bolton reports.

Business continued to boom for British consultants last year, and this is reflected in the average earnings of their most highly paid executives, according to research carried out by NCE.

On average, these firms paid their highest earning directors 10% more last year than they did in 2003. The average pay increase was £27,985, although at least five of the top 20 consultants paid their top earner less than the previous year.

The average salary paid to senior directors and chief executives of the highest fee earning consultants was £311,933 last year, compared with £283,948 in 2003. This includes bonuses but excludes share options.

These gures are based on information included in the annual reports and accounts produced by the 20 largest firms ranked by turnover in the NCE Consultants File 2005.

Three of the top 20 have still to file their accounts for 2004.

Buro Happold - placed 20th - is the only top 20 firm not to reveal how much its highest earner is paid.

'Buro Happold is a partnership and as such the profits are not declared. Each year the annual profits vary and are allocated to the practice's 26 partners, ' says chairman Rod Macdonald.

Atkins, the largest consultant, was also the highest payer. Its chief executive Keith Clarke earned £696,000 last year, much more than the £475,000 his predecessor Mike Jeffries earned the previous year.

Jeffries held the post of chairman and chief executive for only seven months of 2003, between the beginning of the financial year and the moment when Clarke joined.

Jeffries' bonus package is also understood to have been structured differently.

Clarke's salary also includes a bonus of £115,000 and a 'special bonus payment' of £50,000 to reflect 'exceptional performance'.

His salary could reflect the fact that he is on three months notice. Hyder chief executive Tim Wade earns substantially less - £216,000 - but the company has to give him 18 months notice if it wants to replace him.

Mott MacDonald was the second highest payer. Its chairman Mike Blackburn earned £520,620, although this was less than the £710,000 he earned the previous year. Director Peter Chesworth explains that the reason for the change has less to do with Blackburn's performance and more to do with the way in which bonus payments are accounted for.

'Group board directors' remuneration is made up of two elements - one comprising salary, pension, et cetera and the other profit related payments, ' he says. 'For technical accounting and company structure reasons, the profit related element fluctuates from year to year - even with a constant underlying profi t.

'For this reason the remuneration of the highest paid director as shown in the accounts was slightly enhanced and the remuneration for 2004 slightly depressed, even though the underlying profit was similar for these two years. An average of the 2003 and 2004 remuneration is a fairer representation of the remuneration of the highest paid director for both years.' Blackburn's average annual salary over the last two years was £615,310.

Other consultants saw big jumps in their salaries, largely as a result of performance related bonuses. WSP chief executive Chris Cole saw his income jump from £284,000 in 2003 to £515,000 last year. Cole's basic salary is £270,000 and much of the increase is accounted for by bonuses amounting to £224,000.

'The increase reflects the company's recovery from a share price below 50p in 2002 to one in 2004 of over £2, ' says Cole.

As a sign of his confi dence in the company, Cole invests 40% of his after tax performance bonus in WSP shares. This has been justified. Earlier this month WSP shares were trading at around £3.50.

Not all the highest earners were chief executives or chairmen. Mouchel Parkman's finance director Kevin Young earned more than his chief executive Richard Cuthbert, grossing £231,000 last year. Cuthbert's total pay was £225,0000, but Young's salary includes a £50,000 bonus for helping to mastermind the merger between Mouchel and the Parkman businesses, plus a further £27,000 in other bonuses.

As with fi gures obtained by NCE a year ago (NCE 16 September 2004), a consultancy's size is not always reflected by the salary of its highest paid executive. Arup is the third largest consultant by turnover, but its highest paid executive is only eighth in the pay league. Similarly RPS and ERM pay much more than Arup, but generate substantially lower turnovers.

White Young Green also pays its chief executive John Purvis relatively well considering the firm's size. Purvis earns more than the highest paid directors of Hyder, Faber Maunsell, Jacobs Babtie and Scott Wilson, despite the fact that they all generate more turnover and employ more staff. Chief executive Purvis has no doubt been rewarded for his firm's strong profi t growth over the last few years.

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