THE chief executive of BP received an inflation-busting eight per cent rise in his pay packet after steering the oil group to record profits last year.

Lord Browne of Madingley picked up £3.3m in pay and bonuses for a year in which BP outshone rivals and lifted its share price.

He also benefited from share options worth £1.5m, as BP avoided the reserves problems that have hit FTSE rival Shell.

But the bumper £4.8m pay deal leaves Lord Browne short of the £5.7m he earned in 2001. The 55-year-old took a 32 per cent pay cut in 2002 following a 25 per cent fall in company profits.

The chief executive was awarded a 2.5 per cent increase in his basic salary to £1.3m last year, ending a pay freeze for senior directors that began in January 2002.

Lord Browne was also awarded an annual bonus of £1.9m after BP fared well in comparisons with rivals including ExxonMobil, Shell, ChevronTexaco and Repsol.

A spokesman for BP said: "The bonuses are based on a record year for BP and are very much market-related."

The oil group's annual report and accounts also reveal that the chief executive, who joined BP in 1966, has built up a pension fund of £13.9m.

Details of the pay arrangements for senior directors follow BP's announcement of a 42 per cent increase in annual profits to £6.6bn.