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British Airways has offered two of its key executives inflation-busting pay rises as unions branded an average 55% increase in boardroom pay last year as "scandalous" given the current economic climate.
 
BA chief executive Willie Walsh will see his basic pay rise by 11% to $825,000 when he takes the helm at the International Airlines Group, the firm created following its £5.9bn merger with Iberia. He could also pick up an annual bonus of £1.65m, equivalent to 200% of his salary, and is expected to receive a similar amount of shares under the IAG performance share plan.
 
Keith Williams, BA's finance director, who will take over from Walsh and run the airline as an operating company that sits below the Spanish-registered holding group, will also see his pay jump from £440,000 to £630,000. He has been set a maximum bonus of 150% of his salary or £945,000, but will see half of his bonus deferred and awarded in shares after three years.
 
The news came as Incomes Data Services revealed that the average pay among FTSE 100 directors had leapt by 55% over the 12 months to June thanks to sharp rises in bonuses and performance-related pay. In contrast, the value of FTSE 100 shares rose by less than a fifth over the same period.
 
While top executives' basic pay itself increased by a relatively modest 3.6%, bonuses rose by 34% to an average of £701,512. Payouts from long-term incentive plans jumped by 73% to £259m and share option gains soared by 90% to £183m. This means that the average FTSE 100 chief executive now earns £4.9m a year or nearly 200 times the average wage.
 
Paul Kenny, general secretary of the GMB union, branded the situation as "scandalous" at a time when “workers up and down the land are suffering real cuts in their pay and to their services”.
 
According to IDSPay.com, the medium private sector pay award was on average 2% in the June to August quarter, while the median settlement in the public sector was zero. Over the year ahead, the average pay increase is expected to be about 3%, however, due to a rise in inflation to 4% between January and April, a key time when employers undertake pay reviews.