BAE legal chief awarded £1m in pay on top of £5m pension

BAE Systems' retired legal chief Michael Lester has built up a pension worth more than £5m, paying out £250,000 a year, according to the company's annual report.

BAE's annual report also revealed that Lester picked up a bonus of £556,000, which along with a base salary of £568,000 brought his total annual earnings to more than £1m.

In 2006 Lester received an overall pay rise of £51,000. His salary increased by £28,000 and his bonus by £27,000. The increase was offset by a lower level of benefits, which fell to £27,000 from £31,000.

This contrasts with the £62,000 pay cut that hit legal chief David Lillycrop at BAE competitor Smiths Group.

Lillycrop earned a total of £799,000 in 2005 compared with a package worth £737,000 in 2006.

Similarly to Lester, Lillycrop's earnings were split evenly between a base salary and his bonus.

Lillycrop was the second-lowest earner on Smiths' five-man board, with only chairman Donald Brydon receiving less, with £280,000.

In contrast, Lester was the third-highest earner on BAE's seven-member board.

Lester retired at the end of last year to be replaced by Philip Bramwell, who joined from O2.