New Verum Financial Research Index Benchmarks Ftse 100 Company Performance Against Executive Directo
Using information from company reports and accounts for those in the FTSE 100 on 12 July 2013, the Verum FTSE 100 Company Pay report compares growth in company performance (incl.: ability to generate returns on capital; equity; debt in relation to assets; and earnings per share) with growth in director pay (incl.: basic salary; incentives such as pension, health insurance and company car schemes; and bonuses such as shares and cash bonus payments) over the fiscal period 2008/09 to 2012/13. The report concludes that 'performance exceeded pay' at 65% of FTSE 100 companies, while 'pay exceeded performance' at the remaining 35%. Table 1. Growth inexecutive director average pay versus Verum Index of company performance2008/09 to 2012/13: Company Company Verum Verum Index Index (top 15) position* (bottom 15) position* Centrica 1 Royal Dutch Shell 86 GKN 2 AstraZeneca 87 Severn Trent 3 Standard Chartered 88 Persimmon 4 CRH 89 Prudential 5 Old Mutual 90 Burberry Group 6 Anglo American 91 Hargreaves Lansdown 7 GlaxoSmithKline 92 Melrose Industries 8 Wolseley 93 ITV 9 SABMiller 94 British Sky Broadcasting Group 10 WPP 95 Croda International 11 Glencore Xstrata 96 Fresnillo 12 Easyjet 97 Land Securities Group 13 Smith & Nephew 98 BT Group 14 Lloyds Banking Group 99 Aviva 15 Barclays 100 Source: Verum Financial Research In other key findings, the report highlighted a decrease in the number of executive directors, an increase in the number of non-executive directors, and the extent to which director pay has outstripped average pay: Number of FTSE 100 exec directors down 5.8% (349 to 329) in 2008/09 - 2012/13 Number of FTSE 100 non-exec directors up 6.1% (725 to 769) in 2008/09 - 2012/13 Average pay of a FTSE 100 exec director up 13.6% in 2008/09 - 2012/13 Average pay of a FTSE 100 non-exec director up 11.1% in 2008/09 - 2012/13 Average pay of all UK employees up 2% in 2008/09 - 2012/13 (a 10% real terms fall) Bonus culture is alive and kicking The Verum research found that, while the basic salary component of an average FTSE 100 executive director's pay increased by 7% between 2008/09 and 2012/13 (from 0.60m to 0.64m), incentives increased by 24% (from 0.2m to 0.24m) and bonuses by 18% (from 0.47m to 0.56m) over the same period. In particular, in 2009/10, while the overall performance of all FTSE 100 companies rose by 2% according to the Verum Index, the bonus element of executive director pay increased by 28%. The average pay of a FTSE 100 executive director in 2012/13 was 1.45m. For a non-executive director it was 137,527.