Rising profits dwarfed by hikes in top directors’ pay

The remuneration of the construction and housebuilding industries’ best paid directors increased at more than double the rate of their firms’ pre-tax profits last year.

The 10 companies with the highest-earning directors increased pre-tax profit by an average of 69%. The average pay hike for their best rewarded director was 179%.

In all, five of the firms – Tulloch, Miller, Pettifer, Ogilvie and Fairview – increased pay for their top earner at a greater rate than their profit increase. All five of these companies are unquoted.

The more marked differences included Ogilvie, which had a pre-tax profit of £5.4m, up from £4.4m. Its highest paid director took home nearly £1.7m, an increase of 318%.

Geoff Allum, construction analyst at KBC Peel Hunt, said: “In terms of shareholders, even at a private company, nobody really minds what the directors are getting when things are going well; but if there’s a downturn, the focus will be on whether or not they are worth their money.

“Logically, they should take a pay cut when profits go down, but whether they will be willing to do that is another matter.”

The information is taken from Building’s Top 150 supplement.

For the third year running, Stewart Milne, the chairman and chief executive of the eponymous Aberdeen-based housebuilder, was the best paid man in the industry. He received £5.3m to June 2006, compared with £5.1m the previous year.

Milne’s group also soared up the top 150 contractors and housebuilders by turnover, moving from 71st to 59th. Average pay rose 3% to £36,300, which is £42,300 behind the industry’s best remunerated staff at housebuilder Raven Mount.

The top company was housebuilder Taylor Wimpey, with £6.8bn turnover. It was ahead of second-placed Balfour Beatty by nearly £1bn.