FTSE exec salary levels could create boardroom pay explosion

Base
salaries for executive directors at FTSE 100 companies increased by 12.8 per
cent over the last 12 months, research reveals.

The
study by Pensions Investment Research Consultants also shows that, including
cash bonuses and benefits, average total remuneration increased by 20.2 per
cent among FTSE 100 directors.

Stuart
Bell, research director for PIRC, said the increases in base salary had a
knock-on effect on total remuneration because the majority of companies make
annual share awards based on a multiple of base salary, most often awarding
options worth two times salary per year.

He
said, "Basing share awards on ever-increasing annual salary creates a
powerful multiplier effect which has the potential to create a boardroom pay
explosion in the coming years.

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"This
creates a major challenge for shareholders to act to curb excess. Directors’
pay will soon have to be approved by shareholders at AGMs so they will have a
powerful new tool to hold directors accountable."

By Ben Willmott