Scottish & Southern Energy, which last year hammered consumers with hefty energy price hikes, has handed its top executives inflation-busting salary increases after a review of boardroom remuneration concluded that they were underpaid.

On January 1 this year, the company's annual report discloses, SSE's four executive directors saw their basic salaries rise by between 9% and 17%. Chief executive Ian Marchant is now on a basic of £720,000 - an increase of around £100,000 in the past two years.

SSE said the rises, detailed in the annual report, reflected the fact that SSE's executives are paid "below median" for comparable companies in the FTSE index. It is also addressing this alleged anomaly by proposing to the annual meeting that the maximum bonus "cap" for executive directors under the company's new performance share plan be increased from 100% to 150% of salary.

The report of the Perth-based parent company of Scottish Hydro-Electric, posted on its website yesterday, showed that Marchant's salary, annual bonus, and benefits jumped by more than 16% to £1.21m in 2006-07, up from £1.04m in the prior financial year. As well as his basic salary of £675,000, bonus of £518,000 and benefits of £17,000, Marchant, 46, was awarded 46,081 shares under the deferred bonus plan.

These shares had a value of nearly £670,000 at last night's closing price - though they will only vest in future if Marchant remains with the company - taking his total remuneration for the year to nearly £1.9m. Marchant also made a notional gain on the exercise of share options of £408,876.

The annual report also shows that Colin Hood, who joined the board of SSE in January 2001 as power systems director and became chief operating officer in October 2002, was paid salary, bonus and benefits totalling £894,000 in 2006-07, up from £772,000 last time.

Hood, 52, was awarded 33,446 shares under the deferred bonus plan worth nearly £500,000 at yesterday's closing price of 1449p.

Finance director Gregor Alexander, 44, received £656,000 in 2006-07, up from £531,000 last time, including a basic salary of £360,000 and bonus of £282,000. Alistair Phillips-Davies, the 39-year-old energy supply director, took home £659,000, up from £531,000.

Chairman Sir Robert Smith, meanwhile, saw his pay rise from £218,000 in 2005-06 to £266,000.