Tech companies ditch sunken options in favour of pay rises

The recent plummeting in the value of many share options means senior executives in technology companies are seeing their pay move closer to that of their rivals in more traditional businesses, according to a report published today.

The recent plummeting in the value of many share options means senior executives in technology companies are seeing their pay move closer to that of their rivals in more traditional businesses, according to a report published today.

Executive Directors' Remuneration in Techmark Companies by New Bridge Street Consultants shows that in the past year, the typical base salary of a chief executive of a company in the Techmark index of innovative and technologically advanced companies was almost 90 per cent of that enjoyed by a counterpart in a non-technology company in the FTSE 350. Moreover, base salaries of Techmark company directors rose by 11 per cent, materially ahead of the 8 per cent increase seen by directors in companies outside the index.

Share option plans remain the most popular form of long-term incentive for Techmark companies. However, the survey – which bases its analysis on annual reports and accounts – reveals that Techmark companies are as likely as others to operate annual bonus plans.

David Tankel, a partner at New Bridge Street, which advises about 30 per cent of the FTSE 350 on remuneration issues, said the convergence between the pay practices of Techmark and non-Techmark companies was being brought about not just by high-technology companies moving away from the practice of offering low base salaries and high levels of share options. Many traditional businesses were also being forced to offer more attractive option schemes in order to compete with hi-tech businesses.