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The Essential Guide to IT Transformation

Senior staffers at technology companies earn much less than their old economy counterparts, but jack up their remuneration with very generous share option schemes.

No big surprise there, but pay packet consultancy New Bridge Street Consultants has quantified the situation.

But before we get to the details there are a couple of major problems with the current situation. Firstly, tech stocks have been going down the toilet so there's bound to be a lot of pressure to close the salary gap between technology companies and the traditional industry players. Come recruitment time, if eager potential employees don't perceive the fat wad of shares on offer will more than compensate them for not going into banking, they're not going to sign up.

Secondly, institutional shareholders recommend limits as to what proportion of a company's equity should be issued as stock options. These are happily busted by technology businesses, but this is probably down to them wanting to keep fixed costs down and has been done with the institutions' approval. Nearly 60 per cent of technology businesses break the five per cent of total equity issued over a ten-year period limit. And the absolute business benchmark of ten per cent over ten years is broken by 27 per cent of technology companies.

The average salary of technology company chief execs is £210,000, just 59 per cent of the £358,000 paid in non-tech firms. As for finance directors, they get an average £134,000 in technology businesses against the £213,000 their non-tech counterparts are awarded. The figures are for businesses in the FTSE 350 index.

Interestingly BT's departing and heavily criticised finance director Robert Brace is going to keep drawing his £380,000 salary until October 2001, even though he's got a new job as chief finance officer of US utility group Duke Energy. ®

The Essential Guide to IT Transformation

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