Directors Pay Up 21%

This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

There can be no clearer indication that the pay of company directors is out of control than the latest figures from Income Data Services (IDS). They have reported that the total remuneration of FTSE-100 company directors went up by 21% last year, based on figures in the annual reports of companies.

Although base salaries only rose by 2.5%, the overall increase has been driven by “performance” awards such as bonuses and LTIPs (Long Term Incentive Plans). The 21% increase is of course way ahead of the pay rises of most employees which do not even match inflation at 2.2% last year.

Mr Cable can huff and puff as much as he likes about excessive board pay, but there are no signs that his legislation to provide better reporting on pay levels and give shareholders a vote on pay is having any significant impact. We still see the same aggressive bonus schemes being adopted by Remuneration Committees and approved by the large block votes of institutional shareholders.

One thing that would bring more pressure to bear on this would be ensure that private shareholders can and do vote because they are more likely to oppose over generous pay schemes. ShareSoc is launching a campaign on that issue today. If you wish to support it please go to this web page and sign our new petition: www.sharesoc.org/campaigns/shareholder-rights-campaign/

Roger Lawson

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