FTSE 250 directors face tougher curbs on pay

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The Independent Online

Directors of FTSE 250 companies have seen deeper and more wide-ranging cuts to their remuneration packages during the recession than counterparts running businesses on the FTSE 100, research published yesterday shows.

Analysts at Hewitt New Bridge Street, an executive remuneration consultancy, said that companies listed on the London Stock Exchange's second tier index had, in relation to executive pay, reacted quicker to the downturn as a result of most having a smaller group of large shareholders, and often being more mindful of the bottom line.

"Our survey shows that FTSE 250 companies have shown restraint on executive pay by freezing directors' salaries and paying far lower bonuses than in previous years," said Rob Burdett, the principal consultant at Hewitt Bridge New Street. "A number of companies have also reduced long-term incentive award levels. In some respects, they appear to be showing more restraint than FTSE 100 companies."

The consultancy's 2009 report on FTSE 250 directors' pay reveals that 80 per cent of companies have frozen salaries for executives in 2009, compared to just 60 per cent of those on the FTSE 100. The average director of a FTSE 250-listed company is currently paid £444,000 a year.

Bonuses and longer-term incentive plans have also been restricted, although despite many companies cutting back on hours, jobs and pay packages for rank and file workers, FTSE 250 directors still enjoyed additional benefits adding up to 60 per cent of their salaries in 2008/09, compared with 85 per cent in 2007/08.

Mr Burdett also indicated that the more benign economy over the last few months could lead to an increase in pay for FTSE 250 directors next year. "There are not too many companies reporting at the moment, but if we continue to see the emergence of more green shoots in the coming months, we could see a number of boards asking shareholders to approve remuneration packages that were shelved this year."