The 20 best-paid construction plc bosses revealed (2024)

Leading construction bosses at the top listed firms have benefited from increased pay over the past year, in contrast to their counterparts in other sectors

Are Britain’s boardrooms finally listening to concerns over excessive executive pay?

In August, Deloitte reported early findings from its annual pay assessment of FTSE 100 bosses, which found remuneration at a five-year low. Average total pay was £3.4m in 2018 comparedto £4m the previous year, the study found.

Despite this reduction, the average FTSE 100 boss still earns 117 times more than the average UK worker.

A separate study by the Chartered Institute of Personnel & Development noted: “CEO pay has gone up and down every year since 2010, so we won’t know if this is the start of a longer-term downward trend until next year.”

So how does the construction industry stack up?

Exclusive research by Construction News has found the sector bucking the wider trend. Among the top 20 best-paid executives at construction PLCs, 13 pocketed a larger pay packet in 2018 than in the year before.

Packages jump substantially

On average the basic salary rise was 4.7 per cent. Of those that enjoyed a jump in their total compensation, the median increase was 30 per cent.

However, compared with the £3.4m earned by FTSE 100 bosses, contractor packages looked almost modest. Average total compensation among the sector’s highest earners was £1.43m. Among construction’s listed firms, only Leo Quinn of FTSE 250 Balfour Beatty earned more than the average FTSE 100 boss, with a total package worth £4.3m in 2018.

And looking at just the top 10 in our list, the majority saw a fall in pay.

Among construction’s higher echelons and the wider business world, this could be a reaction to growing shareholder and public dissent on the issue of executive pay.

Or perhaps a response to the fact that new government rules mean that from next year, listed companies with 250 or more staff will have to reveal their pay gap and justify their CEO’s salary.

Looking at the numbers in detail, Balfour’s Mr Quinn retained his top spot as the best remunerated executive among listed construction companies.

But while the UK’s largest contractor’s turnaround remains on track – thanks to Mr Quinn’s turnaround efforts – both he and his CFO, Philip Harrison, saw the biggest percentage fall among their industry counterparts.

Mr Quinn’s £4.3m total remuneration in 2018 represented an 18 per cent drop from the £5.4m he received in 2017. Mr Harrison, meanwhile, saw his total pay last year fall 28 per cent to £1.3m.

Remuneration committee concerns

Why the pay cut for Balfour’s bosses? The company suffered a minor shareholder revolt over pay last year, so the remuneration committee was perhaps mindful of this.

Base salaries for both the CEO and CFO were frozen again and have remained the same since the pair were appointed in 2015.

Pension contributions have also been a bone of contention in the business world, and again both
Mr Quinn and Mr Harrison’s allowances in this area remained flat.

Nevertheless, Balfour’s boss still picked up a £160,000 pension cash allowance, while Mr Harrison received £80,000.

Both received a cash bonus that was 69 per cent of the maximum available. In Mr Quinn’s case that was £414,360, while for Mr Harrison it was £207,180, both down from 2017.

Rewards from their long-term incentive plans fell for both, but this followed bumper payouts last year.

Balfour shareholders appeared to mostly approve of the relative restraint on pay, as only 7 per cent voted against the remuneration report at this year’s AGM, compared with 14 per cent in 2018.

Surviving the Kier crash

Balfour’s nearest CN100 rival, Kier, proved to be an outlier in rewarding its top executives in 2018.

The firm has endured a torrid time since last November, when a £264m cash call to tackle its debt caused its share price to collapse.

The failure of the rights issue, when only 38 per cent of the new shares were taken up, led to the departure of then chief executive Haydn Mursell.

A profit warning in June sparked a further 40 per cent drop in the price of its stock. But a boardroom shake-up under boss Andrew Davies, former Wates chief and CEO-in-waiting at Carillion, plus plans to cut 1,200 staff and sell some non-core businesses, helped a share price recovery.

Despite the firm’s current woes, its now former bosses enjoyed significant pay increases in 2018.

Chief executive Mr Mursell climbed a place in our table as he pocketed a total package of £1.48m, a 23 per cent rise.

Mr Mursell, who spent five years in the top job at Kier, benefited from seeing his annual bonus more than double to £580,000 in the year to June 2018.

Finance director Bev Dew, who will step down this month after nearly five years with the contractor, received a total pay packet of £943,000, up 30 per cent on 2017.

Their three fellow executive directors – Nigel Brook, Nigel Turner and Claudio Veritiero – saw similarly significant jumps in annual bonuses.

Mr Brook and Mr Turner left in August last year, but still received their full awards as the firm’s financial year ended in June.

According to Kier’s annual report, the executives’ bonuses were based on the firm’s pre-tax profit (50 per cent weighting), net debt (30 per cent), health and safety targets (10 per cent) and personal objectives (10 per cent).

Kier’s remuneration committee noted that the pre-tax profit figure was a “good performance in light of challenging market conditions”.

Much of the commentary on Kier’s woes has focused on its debt. But the remuneration committee said the firm’s net debt figure of £185.7m at the end of June 2018 was “ahead of the on-target figure for bonus purposes of £190m”.

As a result, bonuses paid to execs by Kier were 79 per cent of the maximum that could be awarded.

Cash is king?

Another company where its top executives enjoyed hefty increases in compensation was Galliford Try.

Chief executive Peter Truscott, who left in March to join housebuilder Crest Nicholson, saw his total package jump 39 per cent to £1.45m in the year to June 2018.

This was helped by his annual bonus nearly doubling to £689,000, due to Galliford Try meeting its profit target and a “strong cash performance”, according to the remuneration committee.

The award from his long-term incentive plan also more than doubled to £100,000, due to the performance of Galliford’s shares. Among those who appeared on last year’s list, he was the highest climber, up three places.

Similarly Graham Prothero, who was promoted from finance director to chief executive after Mr Truscott’s exit, enjoyed a 29 per cent jump in his total compensation to £921,000, helped by his annual bonus also nearly doubling to £344,000.

It is likely to be a different story this financial year as the firm’s share price tumbled on a major profit warning in April, leading to a shake-up of its construction business and a plan to sell its housing interests to Bovis.

Mr Truscott’s departure has been among a number of notable changes among the biggest firms in the past year.

It comes as the industry feels the impact of market jitters, partly prompted by Brexit, lenders’ unease towards the sector post-Carillion and concerns over the future of big infrastructure projects such as HS2.

A turnaround too many?

At Costain, Andrew Wyllie stepped down in May after 14 years at the helm.

Mr Wyllie had led the contractor through a turnaround effort when he joined amid profit warnings and cancelled dividends. Costain has been a rock-solid performer since the turn of the decade, but warning signs have appeared of late.

The Berkshire-based contractor’s share price has been on a downward trajectory for a year. In June, a profit warning saw its share price nearly halve.

Did Mr Wyllie quit at the prospect of having to lead another turnaround? Certainly he felt the impact in his pay packet last year as his total compensation slid 9 per cent to £1.56m.

A significant part of this was due to a 21 per cent fall in his annual bonus to £453,255. His CFO, Anthony Bickerstaff, witnessed a similar fate with a fall in his total package of 9 per cent to £1.04m, as his annual bonus slid.

Mr Wyllie’s replacement, Alex Vaughan, has a big job on his hands to help Costain’s share price back to its peak.

Elsewhere, jostling for position with Balfour as the steadiest performer among construction’s big beasts is Morgan Sindall.

Under founder and CEO John Morgan, the firm has moved onto a surer footing in the last three years, which has seen its share price nearly reach its pre-financial crash heights.

Mr Morgan retained his number two spot in our list despite a 5 per cent drop in his total pay to £2.34m. He felt the impact of a fall in the value of his long-term incentive plan.

This was despite a slight rise in his basic salary and annual bonus.

Likewise, his FD Steve Crummett retained his mantle as the highest-paid non-CEO in our table. Mr Crummett’s compensation was £1.87m, a 2 per cent fall on the previous year.

Entering the charts

Meanwhile, two executives from the firm formerly known as North Midland Construction landed onto our list as new entrants.

The group, which rebranded as NMCN last November, rewarded CEO John Homer, CFO Dan Taylor under a new long-term incentive plan.

Mr Homer, who has led the firm for three years since joining from Morgan Sindall, picked up £1.05m under the scheme, based on the company’s profit performance over the previous three years.

One under-the-radar performer is Wood Group chief Robin Watson, as a 32 per cent jump in his total compensation to £1.88m saw him leapfrog to number three in our chart. Mr Watson was helped by an annual bonus of £1.07m and a 15 per cent rise in his basic salary to £690,000.

His CFO, David Kemp, was similarly well rewarded as his total package jumped 34 per cent to £1.13m.

However, the energy services giant’s approach to remuneration has not been entirely well received by its shareholders. Nearly a fifth of all Wood’s investors voted against the firm’s remuneration report at this year’s AGM, after the firm said it planned to further raise the basic salaries of their top two executives.

Prior to the AGM, the group was forced to dial down the rewards for executives from their long-term incentive plans (LTIPs).

Conflicting pressures

A statement from the company went to the crux of the balancing act for remuneration committees.

“Although the board remains concerned about longer-term retention for senior management, including executive directors, and the external competitive environment for talent, it was agreed that the participation levels (for LTIP) would return to the previous levels.”

"The industry is feeling market jitters, prompted by Brexit, lenders’ unease post-Carillion and concerns over the future of big infrastructure projects"

Debates around executive pay are here to stay.

A survey by the Global Future thinktank last month found executive pay was the biggest concern UK adults have about British business. Pay disparity, tax avoidance and corporations’ impact on the environment were the major issues “undermining faith in capitalism”, the report said.

The study also found that 80 per cent want more action from the government on unethical business. Meanwhile, the gender pay gap is also highlighting inequality among big firms, with much of construction showing little sign of progress in this area.

But how prime minister Boris Johnson might further tackle the issue of executive pay is anybody’s guess.

While Theresa May made reforming corporate pay packets one of her flagship policies, which she was eventually forced to water down, Mr Johnson has yet to reveal his intentions.

Nevertheless, with concerns over inequality and activist shareholders unafraid to voice their opinion, it is clear remuneration committees must remain vigilant.