Directors' pay jumps 14% in year thanks to share incentives

money A 58% rise in share-based long-term incentive plans drove total pay up

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Total pay for the directors of the UK's top businesses rose 14% over the past year driven by a huge jump in share-based long term incentive payments, a pay research company has found.

Incomes Data Services (IDS) said this took the average pay for a director of a FTSE 100 firm to £3.3m.

IDS said basic pay rises were "relatively restrained" at 4% higher, while annual bonuses fell 8.8%.

But total pay rose thanks to a 58% rise in share-based long-term incentives.

And over the past ten years, the median total earnings of a FTSE 100 chief executive has gone up by 243%, Steve Tatton, editor of IDS's directors' pay report, told the BBC.

Mr Tatton said the survey illustrated the "complex make-up of boardroom remuneration".

"With nearly two-thirds of FTSE directors benefiting from an LTIP [long-term incentive plan] award in the latest year, the higher share-based payouts clearly made up for any ground lost in lower annual bonuses," he added.

A director is typically awarded a proportion of their salary in shares, which pay out only if the director hits their performance targets.

Earnings campaigner Luke Hildyard says: "The super rich are taking a bigger share of the UK's total wealth"

Mr Tatton told the BBC that the long-term incentive plans were generally awarded three years in advance, with the results from this survey reflecting decisions made in the 2009-2010 financial year when share prices were much lower.

He said the reverse was now likely to be happening, "with directors being granted fewer shares under that type of formula."

TUC general secretary Frances O'Grady said the survey's findings meant that top bosses' pay was growing 20 times faster than that of the average worker.

"It's one thing replacing bonuses with long-term incentive plans, but FTSE 100 companies are simply exploiting this change to make their fat cats even fatter," she said.


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  • rate this

    Comment number 435.

    Inadequate pay for honest working people is the greatest shame of this country. Measures to reward companies that pay fairly, offer training and grow jobs should be our focus. You'll never stand in the way of greed at the top.

  • rate this

    Comment number 379.

    Company execs are supposed to lead their organisations and have staff look up to them, but they have destroyed that relationship. Most employees now consider their execs as nothing more than parasites. Execs are not pillars of our communities.

    Only entrepreneurs who create companies from scratch should be rewarded so well. Execs who join established companies should be taxed more.

  • rate this

    Comment number 245.

    Seems, happiest countries in the world are mainly Scandinavian, curiously the same countries have the smallest gap in financial inequality.

    The UK isn't even in the top 25 and falling. The rich really are getting richer & the poor poorer. It's not just whinge & moan or jealousy, it's a fact. The info is out there on the net.
    Question is, what are we the British people going to do about it?

  • rate this

    Comment number 209.

    I see that in Switzerland they’re holding a referendum on a proposal to limit the salary ratio in any company to a maximum of 1:12. Perhaps we should consider applying the same principle in the UK. As well as introducing fairer and saner pay differentials, when those at the top of tree award themselves a hefty pay rise, those at the bottom of the heap will also have to enjoy an increase.

  • rate this

    Comment number 103.

    This is greed in its purest form. No amount of excuses can justify such obscene pay. The average worker is told we need to tighten our belt but at the top its excused as motivational. We are not falling for that.


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