Small Talk: Chief executives' pay under scrutiny from Aim investors

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The Independent Online

Excessively high salaries and crass bonuses are not just the preserve of the bankers, it seems. According to a report issued last week by the accountancy group PricewaterhouseCoopers (PwC), unreasonable pay demands by chief executives of Alternative Investment Market (Aim)-listed companies are increasingly likely to be challenged by shareholders, who, let's face it, have had a pretty dire time of it in recent years.

"The Aim market is at a significant point in its 15-year history, with early signs of market recovery," said David Snell, the Aim leader at PwC. "With many companies still suffering from depressed share prices, finding appropriate executive 'incentivisation' whilst managing investor sentiment will be a critical success factor for companies. Transparency in this area provided by the recent changes to the Aim Rules should encourage investors to provide much-needed growth capital."

As Mr Snell points out, new Aim rules that have come into force since the end of March require greater transparency of directors' remuneration, giving investors more opportunity to question whether or not they are getting value for money.

According to PwC, salary levels on Aim vary and broadly increase in line with market capitalisation. Average salaries for chief executives and finance directors at the lower end, with market capitalisation of less than £15m, are £157,000 and £104,000, respectively. But at the upper end, those companies with a market capitalisation in excess of £200m pay their executives £320,000 and £196,000.

Some of the highest Aim salaries are found within the real estate and financial services sectors, which is consistent with the main market, PwC says, although Aim groups generally pay about 60 per cent less than their counterparts on the main list.

Unfair world for Planet Payment

It would appear that we owe a huge apology to everyone at Aim-listed Planet Payment, a company that processes data for banks, including credit-card transactions in a multitude of currencies.

The group was a nominee at last week's Growth Company Awards, the Oscars of Aim, and we decided that they should be considered favourites, based on the fact that of all of those up for the gong, Planet Payment's share price had added most value over the past 12 months. Of course, our backing was more of a curse, and the award instead went to Abcam, the biotech group. So congratulations to them. However, the very moniker, Growth Company Awards, would suggest that firms are to be rewarded for, well, growth. Not that we have any complaints about Abcam, which has seen its share price put on more than 100 per cent in the past 12 months. Planet Payment's shares have put on a remarkable 262 per cent in the past year, and although their trophy cabinet is bereft of the Growth Companies award, the group gets our congratulations.

No-lose deal for Ascent Resources

Think oil and gas exploration, and Europe does not immediately spring to mind as a hotbed of activity, bar notable exceptions such as the North Sea.

Ascent Resources has been merrily digging around the continent for the past five years, and while it does not actually have much oil or gas to show for its efforts, the company does have assets in Italy, Switzerland, Hungary, Slovenia and the Netherlands, as well as in the North Sea.

Last week, the group said that it had sold its Swiss subsidiary to eCORP Europe International for around €8m (£7m), retaining the right to buy into any project, should eCORP manage to find any oil or gas, at just the cost of drilling, meaning that Ascent is de-risked on the Swiss project

The money from eCORP will go into the company's exploration efforts, along with any profit it makes from a small gas-production facility it has in Hungary. Ascent also raised £6m from investors just before for Christmas last year. Of the deal with eCORP, Jeremy Eng, Ascent's managing director said: "This is an outstanding deal. We have realised €8m from our investment in our Swiss assets, retained without obligation the opportunity to participate in any production opportunities from conventional reservoirs and completely removed the funding risk for these projects.

"This validates the time and resources devoted to our portfolio approach of developing oil and gas assets across the whole continent of Europe. Importantly, in this instance, we have achieved a far stronger result than working within a traditional farm-out partnership structure."