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The chief executive of British American Tobacco could receive up to £18.2mn in a new pay deal, making him one of the highest earning FTSE bosses as big UK companies move to narrow the pay gap with US rivals.
The maker of the Rothmans and Lucky Strike cigarette brands said in its annual report on Friday that under a newly proposed incentive scheme, Tadeu Marroco would receive the maximum only if BAT hit certain targets — such as increasing the profitability of cigarette alternatives — and if its share price rose 50 per cent over the three years.
Marroco, who has been chief executive since May 2023, will be guaranteed a minimum of £1.8mn in salary, pension and benefits a year, the company said. He received £6mn in total last year.
The new deal for Marroco comes as several big UK-listed companies have increased pay for top executives to try to compete with the US, where earnings can be much higher.
The London Stock Exchange Group last year secured shareholder agreement to double the pay of chief David Schwimmer to a maximum possible of £13.1mn. AstraZeneca also won approval for a for a pay rise for its chief executive Pascal Soriot, potentially increasing his remuneration to £18.7mn and the chief executive of Smith & Nephew will receive up to $11.8mn this year if all targets are met, a 29 per cent increase on his previous maximum.
“The increasingly competitive global market for senior talent has resulted in upwards pressure on pay . . . With many US-based candidates we observe that pay disparities are particularly evident with incentive opportunities, which tend to be far above typical UK levels,” BAT said in its annual report.
It added that one-third of its senior hires over the past three years had been from the US and that it had “an elevated vacancy rate across senior management levels, with lengthening times to hire”.
Shareholders will vote on the new pay deal, which was first reported in The Sunday Times, at the company’s annual general meeting in April.
