REFILE-Bosses take bigger share of top British firms' profits

(Refiles to correct dateline)

* Top bosses' pay has leapt over the past decade

* Last year they took 0.58 pct of their firms' profits

* Figure was just 0.1 pct a decade ago - Reuters analysis

* Shareholders increasingly raising their concerns at AGMs

* But most companies deny there is a problem with pay

* GRAPHIC - CEO pay at biggest UK firms: http://tmsnrt.rs/23s7Hgn

By Tom Bergin, Simon Jessop and Sinead Cruise

LONDON, May 6 (Reuters) - Chief executives at Britain'slargest companies had a pay cut last year. But profits fellfurther, ensuring a decade-long trend of bosses taking a risingshare of corporate profits continued.

The average pay for chief executives of a company in theblue chip FTSE 100 index was 5.23 million pounds ($7.6million)last year, down from 5.36 million in 2014, a Reutersexamination of corporate filings shows.

However, FTSE 100 profits fell over 40 percent, helping tolift CEOs' earnings to the equivalent of 0.58 percent of theircompanies' total profits for the year, from 0.32 percent in2014.

This represents a leap over the past decade. In 2005, CEOcompensation, including pensions and share awards, was just 0.1percent of pre-tax earnings, the Reuters analysis of annualreports over the period shows.

Rapid growth in executive pay has long drawn criticism fromsome politicians and media headlines denouncing corporate "fatcats". Now shareholders are increasingly raising their concerns,notably over a bumper deal for BP Plc's boss Bob Dudleyas the oil giant reported its biggest ever annual loss.

Measured against share prices, the balance of gains andlosses has also tipped in CEOs' favour.

The FTSE 100 index dropped around five percent last year butCEO pay at the component stocks fell only 2 percent. Between2005 and the end of 2015, the index gained almost 30 percent,while CEO pay doubled at the 87 current FTSE companies wherecomparable data is available.

Executive pay consultants say UK packages are well abovecontinental European levels but fall short of those in theUnited States.

Most companies deny there is a problem with pay. They saythey have responded to investors' demands to link packages toperformance, limiting fixed payouts including pensioncontributions. Any apparent lack of correlation with profits orshare price is often due to market spikes, broader economictrends or one-off events, they say.

INVESTOR ANGER

In recent weeks, investors have expressed their anger atannual general meetings.

Over half of BP shareholders voted against Dudley's $20million pay deal for 2015, a year when the company lost $6.5billion. The vote was not binding but the company said it willconsult investors on future pay deals.

BP said Dudley's pay partly reflected the fact that he hittargets including safety goals, while the loss reflected low oilprices and legal settlements related to the 2010 Gulf of Mexicooil spill, which occurred before he became CEO.

Pay campaigners and governance groups have also criticised a70 million pound package for WPP chief Martin Sorrell before theworld's biggest advertising company holds its AGM next month.

WPP said the payout was linked to a share plan whichrequired Sorrell to agree not to sell some of his shares in thecompany for five years. This exposed him to considerablefinancial risk, a spokesman said.

Some pay experts say the Reuters data shows a fundamentalshift in value from investors to bosses.

"Shareholders really need to be concerned," said DavidPitt-Watson, Executive Fellow of Finance at the London BusinessSchool and an adviser to insurer Aviva.

"If you're getting statistics where you're seeing a hugelygreater proportion of the profits of a company going out to oneindividual ... then that's something that needs to give you agreater worry," added Pitt-Watson, who was previously a boardmember of Hermes Fund Managers.

NO BACK-SCRATCHING

The recent voting against pay plans is not new. During the"shareholder spring" of 2012, investors - who had historicallyused their advisory votes to back management overwhelmingly onthe issue - voted in large numbers against remuneration schemes.This prompted some companies to amend their policies.

CEO pay is usually set by a company's remunerationcommittee, which typically comprises three non-executivedirectors.

Critics say such "remcos" are often made up of people withlinks to the CEO, sitting or former CEOs of other companies, orothers who are predisposed to pay bosses a lot of money.

Louise Patten, head of the remuneration committee at FTSE100-listed shopping centre operator Intu Properties,denied she and her peers were "old chums, back-scratching" theCEO.

"There are some outliers but I think, generally speaking,the system works. Remcos think about remuneration a lot andwhether we have the right strategic drivers," she told Reuterson the sidelines of Intu's AGM.

Patten said the aim was to ensure alignment between remuneration and shareholder returns so that bosses had a strongincentive to do their job well. The proportion of profits thatwent to the CEO wasn't usually a focus for remunerationcommittees, with other measures such as relative performanceagainst peers or share price being more important.

But even some company insiders question whether the split ofrewards is fair.

"A lot of shareholders have got concerns about the directionof travel of executive pay. I share those concerns in somemeasure," Philip Hampton, chairman of GlaxoSmithKline,told the drugmaker's AGM this week.

"Sometimes, maybe even frequently, it is not easy to see thelinkage between the shareholder experience and the executiveremuneration," said Hampton, a past chairman of the Royal Bankof Scotland and retailer J Sainsbury Plc.

SHARE AWARDS

Not every element of remuneration has risen over the years.While seven figure pension contributions were common in 2005,the abolition of defined benefit plans and the introduction ofcaps has reduced the cost to shareholders of executive pensions.

Yet the expansion of share-based rewards has more than madeup for this and largely explained the doubling of pay in adecade.

Some corporate leaders say CEOs may also be effectivelycharging more for their services because shareholders have beengiven a greater ability to get rid of them.

But some politicians and campaigners say shareholders are toblame for failing to hold companies to account.

Fund managers say it is hard to assess whether shareholdersare getting value for money from a CEO. Profits can be erraticand executive windfalls can be generated by actions taken a fewyears earlier.

"To analyse it is very, very difficult and has so manyelements and legs to it that it's not straight-forward," said Aidan Farrell, small-cap equities fund manager at Eaton Vance.

Last year was the first year for which companies wereobliged to publish a single figure for total CEO pay.Previously, companies reported pension contributions and shareawards separately and in their annual reports discouragedinvestors from including the value of pensions in CEOremuneration calculations.

Current reporting rules force companies to include pensionand share payments. ($1 = 0.6895 pounds)

(Additional reporting by Ben Hirschler in London; editing byDavid Stamp)