Small Talk: AIM directors need to wake up to chilly reality

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Over the course of 2008, the AIM All-Share index fell by 60 per cent, causing untold financial pain and misery for those with portfolios invested in the index.

True, trading, fund-raising and the macroeconomic climate were tough – as most chief executives of AIM companies are only too happy to remind you. "We're all in it together," they say. Investors are encouraged to be content to "share the pain".

Those investors will, however, have every right to be angry this morning when they learn that despite the recession and the collapse of many of their investments, the average basic salary of AIM chief executives rose 10.8 per cent in 2008, according to research by Income Data Services (IDS).

The researchers found that the average boss of an AIM-listed firm was paid a basic salary of £198,700, with the average salary of other AIM directors rising more than 10.2 per cent. Finance directors got the thin end of this hefty wedge, with their basic pay increasing 8.2 per cent.

Steve Tatton, editor of the IDS executive compensation review said: "The credit crunch and the economic downturn has been difficult for shareholders of AIM companies, so double-digit growth in AIM chief executive salaries may come as a surprise to them.

"At a time when shareholders are getting such a poor return from their investments, they do look for remuneration committees to exercise restraint. However, AIM companies might argue that their shareholders deserve the best management that they can afford, which means they have to offer competitive salaries."

Mr Tatton also argues that the scale of the increase in directors' pay may in part be due to the fact that bonuses have been scaled back, and company bosses are attempting to claw back higher levels of compensation through basic salaries.

The median bonus for AIM chief executives fell from £30,500 in 2007 to £13,500 in 2008. However, it is revealing that the median total earnings – basic salary plus bonuses – rose from £190,500 to £200,039.

The figures reveal an "I'm all right Jack" mentality among AIM directors, often when the companies they run are struggling to stay afloat. Investors should not shy away from showing their indignation at these numbers, and should vote with their feet if there is not some realisation among AIM directors that the market's gravy train has ground to a halt for everyone else.

Tiny Surrey village takes on oil giants

Many Residents of Surrey have done rather well out of the oil industry, and have the houses to show for it. But while some will have spent their careers digging up the developing world in search of the black stuff, before moving to the leafy countryside for a well-earned and comfortable retirement, they did not expect drills to start springing up next door.

A joint venture, comprising operator Europa Oil & Gas and Egdon Resources, both AIM-listed exploration groups, has applied (and we know it sounds rather unlikely, but it is true) to Surrey County Council for a permit to dig around near the picturesque village of Coldharbour (population, circa 250) in the hope of finding hydrocarbons.

The locals are protesting against the development, saying it will ruin the area. The companies have said that any exploration drilling would take about 12 weeks and they have promised to restore the surroundings once they have finished looking for oil. That is fine, but the residents point out that if the joint venture partners are lucky enough to find oil, they will no doubt be back to collect it, possibly for years.

Of course, the companies argue that they are experienced at working in sensitive areas and have promised a full environmental-impact assessment, which Surrey County Council say they asked for last year.

Our advice to the residents of Coldharbour: buy some shares in Europa and Egdon. They might not stop the drilling, but if it goes ahead and the companies find oil, at least they will benefit from the resultant hike in the share prices.

Arrowpoint to target PLUS market to gain more credibility

Another new listing for the PLUS market as Arrowpoint Technologies, the pension industry software group, is due to hit the market this week.

The group, which has been operating for more than 25 years but came under new management two years ago, does not lack ambition.

The move to PLUS is designed to give the company more credibility with clients, and with a projected market capitalisation of about £26m, it will be one of the bigger companies on the exchange. Arrowpoint is raising less than £1m and concedes its shares will have limited liquidity, but Santany Nandy, Arrowpoint's group managing director, says it will try to hit the main market as soon as possible.

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