LONDON, March 19 BAE Systems Plc has
frozen the salaries of Chief Executive Ian King and two other
top executives, after group earnings were hit by U.S. budget
cuts and delays to a deal with Saudi Arabia.
In its annual report published on Tuesday, Europe's largest
defence contractor said it would freeze King's 2013 base pay at
the previous year's level of 963,050 pounds ($1.5 million) in
view of the tough economic climate and budget challenges.
Finance Director Peter Lynas and Linda Hudson, chief
executive of BAE's U.S. arm, would also have their salaries
frozen at their respective 2012 levels of 546,000 pounds and
$1.05 million, it said.
"Against the performance background ... there will be no
increase in base compensation and no increase in earnings
opportunity owing through the rest of their pay packages," said
Carl Symon, chairman of BAE's remuneration committee.
The salary freeze compares with 2012, when King's salary
rose 3 percent from the previous year, and Lynas and Hudson's
salary increased 5 percent and 3.5 percent respectively.
King also saw his 2012 bonus fall to 1.21 million pounds
from 1.44 million pounds in 2011. Hudson and Lynas's bonuses
increased to 1.01 million and 482,000 pounds, from 929,000 and
BAE had a difficult 2012, in which it failed to resolve
discussions with Saudi Arabia over the pricing of a contract for
Typhoon aircraft and contracts were delayed or cancelled as U.S.
politicians fought over cuts to the country's budget.
Its proposed $45 billion merger with European aerospace
group EADS, seen by some analysts as reflective of the
pressure the company is under to find growth, also collapsed in
October following German political opposition.
In February it said underlying EPS, the metric by which it
measures management performance, fell 2 percent to 38.9 pence
from the previous year, having warned in December that the delay
of the Saudi deal would hit 2012 earnings.
BAE has forecast another tough year and expects to see only
modest growth in EPS this year, as spending cuts hit the U.S.
military budget in a process known as "sequestration".