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Share-based incentives lift UK executive pay

New study says bosses of top firms earned £4 million per annum

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Senior executive pay at FTSE100 companies rose 27 percent in the past year according to a new report on pay and incomes.

The report, published by the Incomes Data Services (IDS) on Tuesday, noted that heads of the top 100 LSE-listed firms made an average of £4 million per annum. However, it added that pay and bonuses hardly rose at all with bulk of the rise being down to the introduction of long-term share-based incentive schemes.

Scrutinising the earnings of FTSE100 directors, IDS found that many of them benefitted from the recent overall improvement in stock market performance in the 12 months to June. Hence, the value of long-term investment plans rose to an average of £938,000 for directors and to £1.6 million for chief executives.

Commenting on the findings, IDS spokesperson Steve Tatton said increases in basic pay and bonuses slowed almost to a halt with pay rising in line with inflation and bonuses plummeting.

"Whether a reaction to government pressure, shareholder concerns or a worse than expected business environment, it seems the brakes have been applied to basic pay growth for FTSE100 bosses,” he added.

"However, while shareholders will be pleased to see more traditional elements of pay seemingly slowing, these figures show that directors' earnings can still grow significantly as a result of a complex mix of incentives," Tatton concluded.


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