Tim Bowdler, chief executive of Johnston Press, saw his emoluments surge 36%, to more than £1m, last year despite a fall in profits as the local newspaper group grappled with the changes affecting the industry.

The annual report for Edinburgh-headquartered Johnston Press shows Bowdler was the biggest winner in an increase in boardroom pay in 2007, when his earnings jumped from £800,000 to £1,088,000.

The rise was largely due to a dramatic increase in the amounts that Bowdler received under performance-related bonuses, from £236,000 to £516,000.

Bowdler's base salary rose by 3% to £556,000.

The rate of increase in Bowdler's emoluments comfortably outstripped the 30% increase in total boardroom pay. This rose to £2,750,000 from £2,128,000 in 2006.

Bowdler was also awarded 125,200 shares under a performance share scheme, the vesting conditions for which were amended to reflect changing times for newspaper groups.

By contrast, Johnston Press reported a 6.3% decline in pre-tax profits before non-recurring items, to £137,412, in 2007. Revenues edged up 0.9% to £608m as the company tried to develop digital revenues to compensate for a reduction in income in key advertising categories.

However, a spokesman for Johnston Press noted that Bowdler's bonus payment partly reflected the fact that the company's results beat market expectations.

The award was based on performance against a range of criteria like growth in total audience, including online, the development of new revenue streams, including digital and on-cost management.

These reflect the fact that groups like Johnston are trying to adapt to a world in which readers are relying on both electronic and print media for information.

Johnston Press amended its performance share plan during 2007 so that awards previously based partly on the company's earnings- per-share (EPS) growth would be replaced by awards partly based on the return on capital achieved.

In the annual report, directors wrote that the change was made in response to the difficult trading conditions faced by regional newspaper groups due to the downturn in advertising markets which could impact on EPS. The change was also intended to recognise the transition that the business needed to take in terms of increased investment in digital publishing.

Bowdler has said he will retire in 2009.

He is in line to receive 242,911 shares under the PSP if the conditions are met. At yesterday's closing price of 128.5p these would be worth £312,140.