Legislation fails to make exec compensation more transparent

Real IR May 2005

Total remuneration enjoyed by CEOs of the UK's top quoted companies rouse 17 per cent in 2004 - while their salaries rose just seven per cent. That is one of the key findings of the latest Executive Director Total Remuneration Survey, produced by proxy voting specialist Manifest and consultancy Independent Remuneration Solutions (IRS).

"Directors are getting richer and richer, legislation is not having any affect on this," said Cliff Weight, director of IRS. Total remuneration rose faster than salaries due to bonuses and generous long-term incentive plans. "This is part of a long-term trend," said Weight. Over the past five years, CEO salaries at FTSE 100 firms have grown by 58 per cent on average but total remuneratin shout up by 208 per cent.

Weight argues that companies' sue of bonuses and other incentives make it less clear to investors how much CEOs are earning. "My recommendation to the (Department of Trade and Industry) is that companies should disclose their CEOs' total remuneration over five years against a five-year chart showing total shareholder returns," said Weight. "The mass of data in current remuneration reports is confusing and fails to explain what is actually happening."

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