UK, November 23, 2006 – The strong performance of many FTSE 100 companies is feeding through to significant increases in the total direct compensation for CEOs and other board directors, mostly in the form of bonuses and other elements of ‘at risk’ pay.

The total direct compensation of FTSE 100 company CEOs has increased by 30 per cent over the past year, taking the median to just under £3 million before adding in the value of pensions, according to Watson Wyatt’s 2006 Executive Reward Survey.

“The strong performance of UK businesses is a significant contributor to bigger executive bonuses and suggests that the continued move towards ‘pay for performance’ is having a positive impact,” said Sue Bartlett, a senior executive reward consultant at Watson Wyatt. “Companies are increasing the maximum size of bonuses payable and the amounts payable for on-target performance.”

The Watson Wyatt survey shows that in FTSE100 companies, typical bonus plans now pay CEOs 85 per cent of salary for reaching target and 150 per cent of salary at maximum. It also shows that for executives in FTSE 100 companies who are two full reporting levels below the main board, bonuses of 30 per cent of salary are available for on-target results and 50 per cent for top performance.

The basic salaries of executives of FTSE 100 companies have continued to pull away from the salaries of those in smaller companies. The median salary increases in 2006 were 7.1 per cent for chief executive officers (CEOs) of FTSE 100 companies, 6.5 per cent in FTSE 250 companies and only 4.7 per cent in small cap companies.

“Salary is far from the whole story,” said Sue Bartlett. “For CEOs, it typically accounts for only 40 per cent of the total value of the package if you include long-term incentives and pension. Our survey results show a continuation of the trend for the value of bonuses and the size of long-term incentive awards to grow faster than salary.”

It was not CEOs who saw the biggest percentage salary increases this year. The median increase for finance directors of FTSE 100 companies was 9.4 per cent in 2006. The median increase for other board directors of FTSE 100 companies was not far behind, at 8.4 per cent.

Note to editors

Watson Wyatt's 2006 Executive Reward Survey is a detailed analysis of the total remuneration of over 1900 senior executives in 120 of the UK’s largest companies, including 12 of the FTSE 20, large privately owned companies and UK subsidiaries of foreign-owned companies. It covers board directors and senior executives and picks up the latest trends in executive reward, being based on the current information, rather than the more limited coverage available from information within company accounts, which tends to be at least 15 months out of date and covers only the directors. The report is available only to participants in the survey.

For further information contact:

Sue Bartlett
Senior Consultant
Watson Wyatt Limited
+44 (0) 1737 274225
sue.bartlett@watsonwyatt.com

Kathryn Leigh-Suddens
Consultant
Watson Wyatt Limited
+44 (0) 20 7227 2252
kathryn.leigh-suddens@watsonwyatt.com

Bruce Wraight
Head of Public Relations
Watson Wyatt Limited
+44 (0) 1737 273370
bruce.wraight@watsonwyatt.com

Visit Watson Wyatt's online press office: www.watsonwyatt.com/europe/news/journalists.

Watson Wyatt Worldwide
Watson Wyatt (NYSE: WW) is the trusted business partner to the world's leading organisations on people and financial issues. The firm’s global services include: managing the cost and effectiveness of employee benefit programmes; developing attraction, retention and reward strategies; advising pension plan sponsors and other institutions on optimal investment strategies; providing strategic and financial advice to insurance and financial services companies; and delivering related technology, outsourcing and data services. Watson Wyatt has 6,000 associates in 30 countries and is located on the web at: www.watsonwyatt.com .