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Regulation Amp Governance
Pay of FTSE 100 CEOs jumps 50%
From the Financial Times of Sun, 07 Dec 2014 09:52:04 GMT

The average total pay for FTSE 100 chief executives jumped by 50 per cent in the past year, according to analysis by Grant Thornton, the chartered accountancy firm.

Although basic salaries were virtually unchanged, there were big rises in elements such as bonuses and stock options.

The average basic salary for bosses of the largest UK companies was £583,291 in 2014, but the total package, including all variable components, was almost five times that, according to Grant Thornton’s annual corporate governance review*.

The review, based on companies’ annual reports, said that although bonuses have risen to 111 per cent of basic salary, from 98 per cent, the maximum possible bonus has only climbed 6 percentage points (from 151 per cent to 157 per cent), “suggesting that this year’s higher bonus payments reflect better company performance”.

The largest rise is in the value of options realised. These have more than doubled, increasing 128 per cent to an average of £1.21m.

The figures for the broader FTSE 350 index showed a similar pattern, although at lower levels, reflecting the smaller size of the companies.

All elements of remuneration vary widely across sectors. Although bosses of basic materials companies, such as miners, have the highest base salaries, the generous bonuses of financial services companies, worth almost double base salary, meant the total package for their chief executives averaged £2.28m, compared with just £1.62m for the chief executive of a resources company.

Remuneration committees may be approving bigger packages, but they have responded to pressure to be more transparent and accountable. Three quarters of listed companies have put in place clawback policies, so executives may be forced to repay bonuses if performance drops after they are paid. No company, however, exercised such a policy during the past year.

*Plotting a new course to improved governance



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