The Manifest/MM&K Executive Director Total Remuneration Survey for 2012 was launched at a seminar in London on Tuesday, 12th June.

The Manifest/MM&K Survey is the most authoritative and up to date analysis of published information on the pay practices of 642 listed companies.

This year’s data shows:

  • FTSE100 Remuneration Committees and boards continue to award increases well above general pay increases and inflation
  • The median increase in CEO Total Remuneration Awarded[1] in the past year was 10% in FTSE 100 companies
  • Upper quartile[2] (UQ) rate of increase was 41%
  • The average increase was 12%
  • Basic salaries only rose by 2.5% (median increase of FTSE 100 CEOs)
  • The total remuneration increases were mainly due to a combination of increases in deferred bonus and long term incentive awards.

 Comparative data for FTSE 100 CEOs:

  • Average Total Remuneration Awarded £4.8 million (median £3.7 million)
  • Average Total Remuneration Realisable £4.2 million (median £3.2 million)
  • Average increase 12%, Median increase 10%.
  • CEO Salary – median increase 2.5%
  • Employee Salary – mean average increase 1%[3]
  • RPI 4%[4](in 2011)
  • FTSE Index (excluding dividends) 5% decrease
  • FTSE 100 median EPS 13% increase

The survey shows how total remuneration has grown much faster than shareholders returns over the past 14 years:

Average Total Remuneration Awarded in £000 for FTSE 100 CEOs and FTSE 100 Index:

 For the first time, the survey contains an analysis of what the BIS proposals for a single figure remuneration disclosure would show[5]

Commenting on this year’s findings, Cliff Weight, Director of the independent remuneration consultant MM&K, said “These results highlight two things. First, that the main problems with corporate governance and pay are in the very largest companies, where directors’ remuneration is only a small percentage of costs, profits and shareholder value and there is little to stop remuneration continuing to increase. Secondly, most Mid-Cap and Small companies have generated much better returns and have simpler and less generous remuneration structures than FTSE 100 companies.”

Sarah Wilson, CEO of Manifest said: “Remuneration committees need more support from shareholders in order to control management’s requests for greater and greater rewards. Independent remuneration consultants play an important part in ensuring the non-executives get unbiased advice. Shareholders need to have confidence that potential conflicts of interest are properly mitigated and that objectivity is not compromised by other group relationships such as audit, tax or corporate finance.”

Survey Executive Summary

“Shareholder Spring” Changes the Executive Remuneration World

FTSE Remuneration Committee chairmen are “quaking in his or her boots … to ensure they don’t get mired”[6] in the current debate over directors’ remuneration.

The results of the 2012 proxy season are leading a revolution in traditional approaches to directors’ remuneration. There has been a step change in shareholder behaviour; several companies have lost the remuneration report vote or have had very large votes against and/or positive abstentions. The enhanced scrutiny of directors’ pay has highlighted performance issues and, in some cases, led to high-profile CEO departures, including Andrew Moss at Aviva and Sly Bailey at Trinity Mirror.

Shareholders are enraged. The Manifest/MM&K Total Remuneration Survey results are likely to increase their state of agitation.

In 2011, for CEOs in FTSE 100 companies, the median increase in Total Remuneration Awarded was 10%, following a 13% increase in 2010. More disturbingly, FTSE 100 one quarter received increases in Total Remuneration Awarded of 41% or more.

Taking the components of pay apart we see that median salary increase for FTSE 100 CEOs was 2.5% – the greatest contribution to the increases comes from the cumulative effect of variable, performance-related pay.

At a time when the global economy remains fragile, these remuneration increases will promote further debate and hostile media comment.

  • A governance crisis in our banks led to a loss of confidence and a huge amount of value destruction in banks and financial services companies. As a result, the public, media and politicians feel that CEOs and executive directors across all business sectors are overpaid.
  • Advisors to both companies and investors have been accused of having inappropriate influence in the pay debate. The Financial Reporting Council, in its representatives’ evidence to the Treasury Select Committee, said that remuneration consultants had a lot to do with the upward ratchet on directors’ remuneration, consultants had not undertaken analysis well enough and they had led the complexity in remuneration and consequently were to blame for the upward drive in remuneration.
  • These views are increasingly shared by wider society; and hence there is pressure on governments and regulators to move towards a rules-based environment. The UK Government has responded with proposals for increased voting rights on remuneration policy and compensation payments on termination and for the disclosure of “a single figure for the total pay of each individual director”.

Public opinion and government action have come at a time of increased investor engagement on governance in general and remuneration specifically, culminating in what the media has dubbed the “Shareholder Spring”. The fall-out from this increased engagement means that there is much work to do and there are challenges for investors and Remuneration Committee s including:

  • Formulating and communicating a transparent, and sustainable reward strategy;
  • Identifying the key strategic performance indicators which enable or support success; and
  • Re-evaluating approaches to communication and relations with shareholders.

For the first time the Manifest/MM&K Total Remuneration Survey includes an analysis of CEO pay using a single figure for total remuneration. We believe it is the first report to publish a “Single Figure” as proposed by the Government (BIS)[7].

The Government has decided companies will report a “single figure of the total pay of each individual director” for the relevant year. The methodology for calculating the single figure will not be known until new remuneration reporting regulations are issued later in 2012.

However, we have decided to include a single figure analysis for FTSE 100 chief executives using our best assessment of what the definition will be. We have called this figure Total Remuneration Realisable (this is defined in the previous footnote in this press release).

Table 1 below shows the figures for the twelve highest paid chief executives. In Section 3 of the report we show the full table for the FTSE 100. We also discuss the problems in setting a single figure definition. Section 3 also demonstrates ways in which the single figure can be used to examine the justification of remuneration that has been paid.

Table 1 FTSE 100 CEOs – Top 10 Highest Paid (Total Remuneration Realisable)



CEO Latest Year Remuneration

Total Fixed Remuneration £K

Total Realisable Variable Remuneration £K

Total Realisable Remuneration £K
















BHP Billiton





Royal Dutch Shell





BG Group

























Source: Manifest – The Proxy Voting Agency

The justification for these amounts lies in the particular circumstances of each company, including its strategy and historical performance and the competitive market for the individual executive.

How does the Manifest/MM&K Survey help?

Remuneration committee chairs do not want hostile shareholder feedback and shareholders do not enjoy going into battle every spring. The focus for all should be on justifiable, sustainable remuneration and reward design. Advice and support, which is independent, objective, expert and professional is therefore crucial.

  • The Manifest/MM&K Total Remuneration Survey, which was first published in 2003, provides a straightforward, unbiased and independent view of directors’ total remuneration. Access to clear, accurate and comprehensive data is not in itself inflationary. It enables Remuneration Committee s and shareholders to work off the same page.
  • Critics of consultants and surveys are shooting the messengers; there is no single agency or element responsible for the current state of directors’ pay or which can put things right alone. This survey provides an objective sense check for all interested parties. Its accessible presentation style provides a common standpoint from which to assess the appropriateness of alternative data and to develop sustainable executive remuneration policies and practices which are right for the business.
  • Companies should review potential conflicts of interest in the advice they receive from remuneration consultants. Remuneration committees should have the authority and budget to appoint, independent of management, their own advisers who can provide independent advice and support to Remuneration Committees.
  • Shareholders should not be dependent on “black box” voting recommendations but should be using objective and defensible voting advice based on a thorough, transparent analysis of the issues to inform their decisions and take ownership of their Stewardship role.

Definitions of Total Remuneration

“Total Remuneration Awarded

The Manifest/MM&K Total Remuneration Survey uses Total Remuneration Awarded as the primary basis of comparison. This is defined as the total of:

  • Salary and other fixed cash payments in the year
  • Cash bonuses paid or receivable in respect of performance in the year
  • The expected value of deferred bonuses that are awarded in respect of the year
  • The value of pensions accrued and benefits-in-kind provided in the year
  • The expected value of share options and other share plans awarded in the year.

“Total Remuneration Realised”

In some places, the basis of comparison is Total Remuneration Realised. This excludes deferred bonuses awarded in the year and the expected value of share options and other share plan awards in the year, but includes instead the amounts realised from LTIPs and deferred share schemes that vest in the year, plus gains on options exercised in the year. These amounts realised are from awards made in earlier years.

The Department of Business Industry and Skills has recently consulted on a number of proposed changes to the Companies Act and reporting regulations which include the use of a “single figure for the total pay of each individual director” for remuneration disclosure.

“Total Remuneration Realisable”

We think it is likely that the final BIS proposal for a single figure will use a definition of Total Remuneration Realisable.

The principal difference between Total Remuneration Realisable and Realised is the point at which the value of share options is included. The Realisable value of share options is taken in the year that any exercise restrictions (such as performance conditions) are lifted. The value is calculated using the ‘in the money’ market value of the shares less the exercise price (i.e. the paper gains). The Realised Value is taken in the year that the options are exercised.

The June 2012 survey analyses the latest annual reports of 642 companies. We include most of the companies with financial years ending 31st December 2011, thus making the report data the most up to date available.


[1] We define Total Remuneration Awarded as the total of salary, cash, benefits-in-kind and the expected value of deferred bonuses, share options and other share awards granted in the year.

[2] 25% of companies are in excess of the upper quartile.

[3] This is the average for FTSE 100 employees, according to data in their latest annual reports. 2% is the figure for the UK generally for 2011, see

[5] For this purpose, we have assumed that the requirement will be to disclose Total Remuneration Realisable (see definition below in Notes to Editors)

[6] Source: Sir David Walker in evidence to the Treasury Select Committee on corporate governance and remuneration in the financial services sector on Tuesday 22 May.

[7] The Financial Reporting Council (FRC) is currently researching methodologies to produce a “single figure” but has yet to publish a recommendation. Both MM&K and Manifest in separate submissions to government consultations have argued that a single figure of total remuneration is over-simplistic and likely to lead to misleading analyses. Publication of both “total remuneration awarded” and “total remuneration realised/realisable” would be a better approach:

  • Awarded measures remuneration committee decisions made in the financial year and
  • Realised/Realisable measures the outcomes of performance based on decisions which may have been made several years earlier.

Note: Top 10 rankings updated 18:24 on 12 Jun 2012.

Last Updated: 12 June 2012
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