Directors must have stake in firms to prove interest

Nearly a third of all companies in the FTSE 100 set a minimum level of
shares their directors must own.

Research by consultants Will-iam M Mercer shows that UK companies are
following the lead of their American counterparts by requiring top executives
to own a substantial shareholding in the companies they help run.

It shows that 32 of the top 100 firms have a minimum share requirement for
directors, with eight of those companies introducing the policy last year and a
further six following suit this year.

Typically the value of shares owned by directors will be between one and
three times their salary, which can usually be built up over a period of three
to five years.

"Increasingly, top directors are required to have a significant
personal stake in their company, since this can act as a motivator for
delivering shareholder value," said Belinda Hudson, European principal at
William M Mercer.

"Shareholding policies help counter the claims that option plans are a
one-way bet and that executives can’t lose. Indeed, the recent fall in share
prices has hit many directors quite hard."

www.wmmercer.com

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