Value for money?

2007 is likely to be one busy year for the pub industry.

Following hot on the heels of the roll-out of the Licensing Act, the introduction of no-smoking pubs in England and Wales this summer will be a monumental challenge for the industry, while more corporate wheeling and dealing is surely on the cards.

Consequently, those with shares in listed UK pub companies will have high expectations of those charged with steering their investments through the turbulent waters that lie ahead.

With this in mind we've looked at to what extent chief executive officers at the UK's top six listed pub companies earned their corn in the last financial year.

With shares in most of the listed pubcos rocketing in 2006 it could be argued that all six of our candidates have done a grand job.

'Options, schmoptions'

Out-and-out share price gains don't tell the whole story, however. We've decided to compare total salary package increases - or decreases - with movements in the relevant company's earnings per share (eps).

The total salary figures quoted in our illustration incorporate performance-related bonuses, including share plans and other 'taxable benefits', but omit share options, either the value of those awarded or redeemed throughout the year.

It is true that substantial payments can be derived from turning these options - as Giles Thorley would be the first to attest, having netted around £9m last year. But such redemption doesn't necessarily reflect year-on-year performance, hence we have stripped them out.

Accounting for peaks and troughs in an executive's pay is nigh-on impossible without being privy to the findings of a company's remuneration committee.

That said, total salary packages of some executives rose by modest amounts; others saw significant hikes, while one witnessed a decline, due primarily to a lower performance-related bonus.

While the comparisons may be 'rough and ready', they give an indication of who is doing what, where, and for how much.

'Worth every penny?'

On the face of it, Enterprise Inns' Ted Tuppen, awarded a CBE in the recent New Year's Honours List for services to the hospitality industry, tops our poll. He gets a gold star for salary-to-eps performance, with JD Wetherspoon's John Hutson coming in as a 'highly-commended' for his pay packet/eps ratio, being pipped to the number one slot by virtue of Tuppen's sub-double digit payrise a year after a slim total pay package reduction.

Tuppen's total salary award rose a 'meagre' 9.4 per cent in 2006 to £863,000, with his basic pay rising £45,000. The group's eps rose nearly 17 per cent to 68.3p, although this represents a slowdown from 2005's 33 per cent improvement to 58.4p.

As Enterprise considers whether or not to become a REIT, Tuppen's attitude to focusing on the job in hand rather than taking an armful of non-executive roles stands him in good stead. Thoughts of retirement from the company he helped found back in 1991 may be entering his mind, but we're likely to see more of the man for a little while longer.

JD Wetherspoon's (JDW) John Hutson has overseen what some describe as a company renaissance, although not everyone is convinced by the group's turnaround in fortunes. Hutson's basic salary rose nearly five per cent to £291,000, while his performance bonus more than doubled, from £21,000 to £87,000. JDW's eps rose more than 40 per cent, although there are those who attribute some of this to the group's share buyback programme.

Tim Clarke of Mitchells & Butlers was awarded a 12.9 per cent pay hike, taking his annual package to £951,000 - £3,657.69 a day. This was ably offset by a 15.4 per cent rise in eps, earning him a 'highly commended' tag. Chided in some quarters for being somewhat restrained in a pub business that demands fleetness of foot, Clarke has nevertheless shown notable mettle in the last year, not least in helping to rally shareholders to see off the attentions of Robert Tchenguiz last summer.

On the face of it Marston's Ralph Findlay helped his group's cause with a 20 per cent-plus reduction in total pay in 2006, while the newly-named brewer's eps figure rose 14 per cent, following on from an 11.3 per cent rise in 2005. Findlay's apparent largesse is partly explained by a bonus reduction, down from £210,000 in 2005 to £73,500 in 2006, although his basic salary rose a modest five per cent to £367,500.

Rooney Anand, head of Marston's rival Greene King had a busy 2006, folding his group's acquisition of Scottish brewer Belhaven and Essex's Ridley's into the group, and latterly persuading shareholders of Hardys & Hansons to sell their company to the Bury-St-Edmunds concern by virtue of its cultural as well as economical fit.

Anand's bonus of £340,000 - 85 per cent of his basic salary in 2006 - would be regarded as a just reward for helping boost the group's earnings per share by more than a third, despite his total pay award outstripping this rise by 5.5 percentage points.

Finally, there's Punch Taverns' Giles Thorley. Aside from the aforementioned options pay bonanza, Thorley received a not-insignificant 31 per cent pay rise, while his company's earnings per share rose nearly 13 per cent.

It remains to be seen whether his prediction that he might leave the group some time this year - which he outlined in The Publican​ last September - comes to fruition, or whether Punch's eps performance can outrun his own salary hikes.

Whatever the outcome of either scenario, we doubt whether many shareholders will be queuing up to complain about his own drawings from the company.