Payments to directors at the top 100 contracting firms have increased by £5.5 million in their most recent financial year, while turnover and profits have both fallen.
Research undertaken by CNinsight as part of the CNinsight 100 annual review of the construction sector shows total director remuneration was £191.5m in the most recent financial year, compared with £186m a year earlier.
In all, 32 firms paid their directors more than the top 100 average of £1.9m. Confirming their propensity to pay their directors more, these 32 firms increased director remuneration by 7.5 per cent, to £129m, in total, compared with £120m in the preceding year.
These tended to be the top performing companies. Their average revenue growth was 5.8 per cent, compared with 1.3 per cent for the top 100 taken together.
The 32 firms also reported above-average profits growth of 5 per cent, compared with the 5 per cent total fall in amalgamated pre tax profits of all firms in the CNinsight 100.
However, performance did not improve at all 32 firms.
Bowmer and Kirkland increased its directors’ pay by £6m but both its sales and profits fell in its most recent full financial year, ending 31 August 2009.
Other firms including RGCM, Midas, Carey and GB Building also saw directors’ pay increase while turnover and profit fell.
One reason for increasing the pay of directors, and senior staff in general, is that in tough economic times retaining top talent can be very difficult.
Of these 32 firms, 11 are listed on the London Stock Exchange, which involves having distinct roles for directors and often results in such firms having a relatively high number of directors.
Large listed firms such as Homeserve and Carillion each have 11 directors, including non-executive directors, while CNinsight 100 number one firm Balfour Beatty has 12.
Having a large number of directors is not confined to the listed firms and also includes some privately owned companies. Byrne Group is one example - this £326m-turnover firm lists 19 directors in its results filing with Companies House.
Bowmer and Kirkland has the highest paid director of any in the top 100. This director received £10.2m in the financial year ending 31 August 2009. The highest paid director the year before was paid £6.7m.
Bowmer and Kirkland was not the only big payer among the top 100 contractors. Ten of the 32 companies paying above the average rate to directors gave their highest paid director more than £1m.
There were several large increases in the annual salaries paid to companies’ highest paid directors. Morrison Utility Services saw a significant increase in the remuneration of its highest paid director up 169 per cent to £783,000 in the financial year which ended 31 March 2009.
In total, 11 of the highest paid directors from the top 32 payers received an increase in remuneration of more than
30 per cent.
Not all payments increased. The highest paid director at Seddon, Severfield Rowen, Vinci Plc, Sir Robert McAlpine, Carillion and Balfour Beatty were all paid less than the highest paid director the year previously.
While the average paid to directors across each firm in the top 100 was £1.9m and total payments increased 3 per cent, average salaries for those working for the top construction companies barely changed, rising just 0.4 per cent to £36,476.