Fri, 20th Dec 2013
According to the most recently posted pay figures for chief executives working at FTSE 350 companies, pay figures are gradually starting to normalize. After coming under fire for excessively high salaries in recent years, executives have started to show restraint, and opted for an average raise of just 2.6 percent during the 2012/2013 financial year. More than one quarter of FTSE 350 chief executives opted to take no increase at all in their base pay, and there were several CEOs that had chosen not to increase their base salary for two years in a row.
The figures do not take into account bonuses such as stock options. These can often significantly inflate the salaries of chief executives. However, since bonuses are tied to the performance of the chief executive and the company as a whole, they are considered a more acceptable reward scheme than outright pay rises.
The report did examine bonuses separately, however, and found that CEO bonus payments for FTSE 100 companies had actually decreased by 5.2 percent over the last year. CEOs in the FTSE 250, however, saw bonuses increase slightly.
As of 2014, businesses will be required to disclose more information about the salaries and bonuses of their chief executives. The new legislation will pose many challenges for big companies as they will be forced to examine how their bonus structures work and how best to report them to shareholders, and find a fair and flexible system for calculating salaries and bonuses.