Prudential's departing CEO Thiam earned $17.5 mln in 2014

(Adds details on fund manager pay)

LONDON, March 31 (Reuters) - Prudential (HKSE: 2378.HK - news) paid outgoing chief executive Tidjane Thiam 11.8 million pounds ($17.45 million) in 2014, a 35 percent increase on his 2013 compensation, following a bumper incentive plan payout in his final year in charge.

Thiam, who is leaving the dual-listed British insurer to join Credit Suisse (LSE: 0QP5.L - news) in May, was awarded 8.25 million pounds as part of the company's three-year LTIP and earned a 2.12 million pounds bonus for his performance last year, Prudential's annual report showed.

Mike Wells, head of Prudential's U.S. business - and the executive most widely tipped to succeed Thiam - was the company's second highest paid board member, earning total compensation of 11.39 million pounds.

Prudential said one employee earned around 15.4 million pounds last year but it did not name the individual as they do not sit on the company board.

A company spokesman declined to comment on a Sky News report that the top earner was M&G Investments fund manager Richard Woolnough, who runs the M&G Optimal Income Fund, the M&G Corporate Bond Fund and the M&G Strategic Bond Fund, three of the company's flagship fixed interest funds.

All executive directors received a 2015 salary increase of 3 percent in line with those awarded to other group employees.

The company said it would also increase the fee paid to Chairman Paul Manduca by 16.6 percent to 700,000 pounds from July, in recognition of the "increased demands" of his role.

Like several other financial institutions and asset management firms, Prudential has announced plans to apply 'clawback' provisions to executive bonuses from 2015.

Prudential also said future executive bonus awards would reflect achievement of internally set "economic capital targets", as Europe's insurance sector prepares for the implementation of new EU capital adequacy rules known as Solvency II.

Prudential's Group IFRS operating profit rose by 14 percent to 3.19 billion pounds in 2014. ($1 = 0.6763 pounds) (Reporting By Sinead Cruise, editing by David Evans)