Diageo chief executive sees salary package hit £3.5m as 900 lose jobs

 
Paul Walsh

Diageo chief executive Paul Walsh received pay totalling £3.5m as his company prepared plans to axe 900 jobs in Scotland, it was revealed yesterday.

Walsh took home the equivalent of £67,300 a week in the 12 months to June 30, according to accounts published by the drinks giant.

Walsh last week rejected a rescue scheme proposed by a government-led taskforce and decided to press on with cost-saving plans to close the Johnnie Walker whisky bottling plant in Kilmarnock, with the loss of 700 jobs, and make another 200 people redundant from the Port Dundas grain distillery in Glasgow.

Diageo, whose brands include Guinness and Tanqueray gin, paid Walsh a base salary of £1.1m during the period.

This was topped up with an annual performance bonus of £508,000, share incentive plan payment of £3000 and other benefits, likely to have included company car and drive, financial advice and medical insurance, worth £54,000.

Walsh also received £595,000 from exercising share options and £1.2m from a longer term bonus plan.

On top of this, Walsh saw his pension pot balloon by £3.4m to £11.7m during the year. Some £1.1m of the increase was due to rule changes around pensions. He can look forward to a £637,000 pension on retirement.

Walsh’s pay last year, during which Diageo’s profits rose 4% to £2.6bn, was actually lower than in the 2008 financial year when he took home £5.1m.

Walsh received no increase in his basic pay in October, the accounts show.

Walsh was appointed chief executive of Diageo in September 2000, having previously been chief operating officer and run the US subsidiary of predecessor company Grand Metropolitan. He is currently chairman of the Scotch Whisky Association.

Drinks companies have suffered from falling consumer spending during the economic downturn.

Diageo, whose stable includes a number of single malts including Talisker and Lagavulin, saw volumes fall 4% last year but price increases kept its sales flat at £9.3bn.

Walsh warned that profit growth at the world’s biggest drinks company in the current financial year will be in “low single” figures, adding that he doesn’t expect any major improvement until next year.

A taskforce comprising Scottish Enterprise, trade unions, council bosses and local politicians had suggested to Diageo it consider alternative measures including the building of a new Johnnie Walker plant on a greenfield site at Kilmarnock.

Diageo was formed from the merger of Grand Metropolitan and Guinness a decade ago.It employs 4500 people in Scotland producing whisky and white spirits.