Six-figure pay gaps exist between boards of listed and non-listed firms

Companies wishing to float on the Stock Exchange should first be prepared to pay an extra £100,000 per year to each member of their boards, according to research.

A report by remuneration specialist Hewitt New Bridge Street showed that a six-figure pay gap often exists between listed and non-listed firms.

The mid-range base salary for chief executives at companies with a market value of between £5m and £250m on float is £200,000, according to the 2008 report on Executive Remuneration and Employee Share Schemes at Initial Public Offering (IPO).

The comparative salary at firms in the lower half of the FTSE Small Cap index – those outside the biggest 350 UK listed firms – is £302,000.

The report added that companies coming to the stock market would invite problems by not closing this gap before going to investors.

Rob Burdett, principal consultant at Hewitt New Bridge Street, said: “It is clear that companies coming to the market often have senior executive remuneration structures pitched well below the normal publicly-listed rate.

“The disparities between companies coming to market and those already listed are significant and are likely to require adjustment after the IPO has taken place.

“By not thinking through how their senior management are retained and incentivised, companies may negatively impact their IPO valuation.”

An IPO occurs when a company issues common stock or shares to the public for the first time.

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