Companies rush to disclose pay before committee report

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The Independent Online
ROGER TRAPP

Signs that companies are rushing to anticipate the recommendations of the Greenbury Committee come in the latest survey of boardroom pay published today by remuneration advisers Monks Partnership.

The study of FT-SE 100 company annual reports carried out late last month found a "dramatic increase" in disclosure of boardroom pay and a marked move towards longer-term incentives, away from traditional executive share option schemes following concerns about their efficacy.

By the time of the survey, 48 companies disclosed the elements of named directors' remuneration, compared with only two in early December 1994.

The move towards longer-term incentive arrangements has been less pronounced, but is still significant. According to the latest study, 59 companies operated such schemes, compared with 37 last year.

The report also says a third of the best-paid directors in leading companies received no increase in fixed pay - basic salary plus the taxable value of benefits in kind - in the past year.

For the two-thirds of best-paid directors who did receive a rise, the median was 5.7 per cent.

Total earnings - fixed pay plus the proceeds of bonus arrangements and other payments excluding pension contributions and share options granted - rose 8.4 per cent in the industrial sector and 12.4 per cent in financial and property companies.

The most recently introduced of the alternative plans involve the purchase of shares by trusts. Such shares are restricted and only become the executive's property if predetermined performance conditions are met over a period of time, frequently three to five years, and if the executive still works for the firm.

David Atkins, the report's editor, said: "The increase in the disclosure of the elements of executive directors' pay - what has become known as full disclosure - and remuneration arrangements over the past six months has been dramatic."

About half had opted for full disclosure by the time of the study, and more companies had taken that route since, he added. Some went further and also revealed fees earned by named non-executive directors.

Essex-based Monks also expects companies to start providing greater explanations about their approach to basic salaries as well as more information about the workings of incentive schemes.

Since many of these were complicated, "full explanation is required if shareholders are to understand a plan's objectives, its operation and the potential value of the incentive to plan participants", Mr Atkins said.

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