Shareholding increasingly important in executive pay

The
way levels of executive pay are determined is changing rapidly and becoming
increasingly complex according to the latest Andersen Directors’ Remuneration
Report.

The
report examines remuneration of directors from the top 350 UK companies and
reveals a number of emerging trends.

"The
main themes that emerge are the strengthening of the link between the level of
award under long-term plans and performance, flexibility in the design of
remuneration packages and an increasing emphasis on executives building up a
meaningful shareholding in the company," said Carol Arrowsmith, partner
and head of Andersen’s executive compensation practice.

Almost
20 per cent of FTSE 100 firms have increased the annual bonus potential during
the last financial period, with executive bonuses now typically between 30 and
60 per cent of salary.

Shareholding
is also becoming more important, especially among FTSE 100 companies, where 27
per cent now require executives to have a stake of anything between 100 and 500
per cent of salary level.

According
to the report chief executive pay ranges from £200,000 to £950,000 and other
main board directors can expect to receive around 60 per cent of the salary of
the top executive.

High-performing
directors receive incentive awards ranging between 150 and 300 per cent of
salary depending on the size of the company.

Nationality
also proved important with 10 per cent of companies now allowing different
practices, including higher potential awards, to apply for non-UK participants.

By
Ross Wigham

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