Meeting tough performance targets is becoming a decidingly important factor
in the level of directors’ remuneration, according to newly released research.
Andersen’s annual Directors’ Remuneration Report shows that for a director
of a high-performing company, the value of the annual incentives that could be
earned ranges from 150 per cent of salary to 300 per cent.
Nearly a fifth of FTSE 100 firms have increased their bonuses during the
last financial period, and bonuses are typically between 30 and 60 per cent of
The report, which looks at the remuneration of directors in 310 of the FTSE
350 companies, also shows that larger share options are being offered if
directors can hit tough performance targets – up to three times their salaries.
But in a quarter of share option plans, only a portion will be put into
practice following average performance.
Carol Arrowsmith, partner and head of Andersen’s executive compensation
practice, said, "The main themes that emerge are the strengthening of the
link between the 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."
No UK-based executive director earns a £1m salary, claims the report.
Chief executive pay ranges from £200,000 in the smaller FTSE 350 companies
to over £950,000 in the global FTSE 100 firms.
Main board directors can expect to receive around 60 per cent of the salary
paid to a top executive.
Staff nationality also proves important, with 10 per cent of companies now
allowing different practices, including higher potential awards, to apply for
Arrowsmith said, "The role of the remuneration committee is
increasingly about balancing the pressures of globalisation, the concern of
shareholders, the complex regulatory environment and the scrutiny of the media.
It is set to become harder than ever."
By Ross Wigham