Software firm 'fat cats' net £600m

Published on Tuesday 27 May 2003 01:00

THE sector may be struggling with fragile demand, but the United States’ top technology executives took home more than £600 million in pay and bonuses last year, according to a new report.

At the top of the list of 754 executives was Thomas Siebel, chief executive of software firm Siebel Systems, who pocketed 21.2m from pay, bonuses and the sales of stock options.

Scott McNealy, of Sun Microsystems, which in February announced a 36m investment at its Linlithgow plant, was second on the list, pulling in about 15.8m last year after cashing in 15.4m in share options.

And third was Craig Barrett, the chief executive of PC maker Intel, with 11.9m.

The findings are revealed in the latest annual executive compensation survey by the San Jose Mercury News.

Yet the payouts were vastly reduced from previous years as the sector continued to struggle in the wake of the dotcom crash in 2000 and as stock markets dived around the world. This year’s payouts totalled about 20 per cent of the 2.9 billion paid out in 2000 at the height of the technology boom. And it is roughly 25 per cent of the 2.3bn paid in 2001.

According to the latest snapshot, in 2002 executive compensation fell as the stock market continued to founder.

In just two years, Silicon Valley’s top chiefs have seen the value of their vested, unexercised options drop from 9.8bn to just 1.35bn on the back of the most severe bear run on equity markets for 30 years.

Christos Cotsakos, the former chairman and chief executive of online stockbroker ETrade, received the 11th biggest pay check despite his controversial exit from the company last year. Mr Cotsakos left amid shareholder backlash over his 53.8m pay package in 2001. That revolt forced him to return 22.6m in compensation.

News of the pay deals for technology "fat cats" comes as executives in other sectors face shareholder revolt over their pay settlements.

HSBC is expected to face angry exchanges with shareholders on Friday over its decision to pay Chicago-based executive William Aldinger III 36m over three years. The bank described the deal as good value for money.

Mr Aldinger will also get free dental and medical treatment for life as part of the settlement.

Last week, shareholders in drug giant GlaxoSmithKline shot down proposals for a deal that would see chief executive Jean-Pierre Garnier get more than 20m compensation if he lost his job.

Keeping it clean and green

COMPANIES are being forced to become more cost-conscious when choosing their fleet vehicles, and not only in terms of the up-front prices.

The changing regime for taxing the company car is starting to have its desired effect on the models people pick, according to new research.

There has been a marked increase in the popularity of cars with low carbon dioxide emissions - this measure, together with the price, having become the basis of tax assessment a year ago, rather than engine size and mileage.

No fewer than 92 per cent of the 180 companies surveyed by pay and incentives specialists Monks Partnership said that at least some of their employees had been influenced by the change.

In most companies there was a 15 to 20 per cent increase in the numbers choosing diesel engines, and over a third of the companies said they anticipated a shift to dual-fuel cars - which are also exempt from the London congestion charge.

One possible downside, however, is that the new tax regime actually makes it more attractive for low mileage drivers to choose a company car rather than alternative perks - and 40 per cent of the firms surveyed said they had evidence of this happening.

Over 2500 drivers have qualified for the 100 per cent discount on company car tax for choosing alternative powered vehicles, according to the Energy Savings Trust’s TransportEnergy division.