JAMES MURDOCH, the chief executive of BSkyB, earned £2.2 million last year — a period in which the satellite broadcaster’s share price fell by 15 per cent.

His salary included a cash performance bonus of £1.2 million, which is based on the achievement of growth targets in operating profit, free cash and subscriber numbers, but not the share price.

A spokesman for Sky said: “The bonus reflects successful achievement of challenging targets during the financial year.” Sky is 37.2 per cent owned by News Corporation, parent company of The Times.

The 32-year-old chief executive also received a second bonus of 450,000 restricted shares, worth £2.4 million at current prices. However, these shares are released only if a mix of operational and share price targets are hit over the next three years.

The figures are disclosed in the company’s annual report, which says that Mr Murdoch was to have received a £1 million bonus “if the performance targets for the year are met”, rising to a maximum of £1.5 million if they “have been exceeded”.

Jeremy Darroch, the chief financial officer, who joined BSkyB from Dixons, the electricals retailer, in August 2004, earned £1.12 million in his first year in the company. His predecessor, Martin Stewart, now finance director of EMI, the music publisher, took home payoffs worth £2.3 million.

In the year to June 30, Sky shares fell to 527½p, from 618p. This followed Mr Murdoch’s first annual results presentation, in which he disclosed that short-term profitability would have to be sacrificed for long-term investment.

In the year that followed, turnover increased by 11 per cent to £4.05 billion, while the number of subscribers rose by 6 per cent to 7.87 million, despite the mounting popularity of Freeview, the free digital service. Pre-tax income was £631 million, up 23 per cent.

However, Sky shares have never risen above £6 since Mr Murdoch launched his strategy and, according to the annual report, Sky performed below the median for the FTSE 100 on a total-shareholder-return basis, which includes dividends as well as the change in a company’s share price.

Aside from the bonus, Mr Murdoch was awarded £200,000, the second instalment in a relocation allowance that lasts until November 2006. When he took the job in November 2003, the chief executive moved from Star, the Asian satellite broadcaster, which is wholly owned by News Corporation.

Mr Murdoch is the younger son of Rupert Murdoch, chairman of BSkyB and chairman and chief executive of News Corp. Fox, News Corp’s American film and TV arm, supplied programming to Sky at a cost of £69 million. Also incurred was a payment of £4 million to Shine Entertainment, a TV production company run by Elisabeth Murdoch, James’s sister.

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