The
American trend of requiring directors to own a stake in the company is now
becoming more common in this country, according to research by consultancy William M Mercer.
Nearly
a third of the FTSE 100 now require directors to own shares in the company which
can often amount to anywhere between one and five times their salary level. The
move is designed to bring corporate thinking into greater alignment with that
of shareholders.
The study reveals that 32 of the top 100 companies now 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.
"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.
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Typically
the value of shares owned by directors will be between one and three times
their salary and be built up over a period of three to five years. Chief executives however, are often required to hold a higher
value of between one and five times their salary,
reflecting among other factors their greater ability to influence performance.
By
Ross Wigham
