AIM bosses beat inflation
Article Date: Nov 13 2008
AIM directors' pay has held up well
Chief executives of AIM companies increased their remuneration last year by nearly three times the current rate of inflation.
That is one of the findings of Growth Company Investor’s sixth annual survey of the pay of directors of AIM-quoted companies, sponsored by Halliwell Consulting. The survey, which is published today, shows that the number of AIM chief executives taking home over £1 million more than doubled to 24, but it also demonstrates that top payments can be a poor indication of the future profitability or share price performance of the companies paying out the boardroom largesse.
According to AIM companies’ latest annual reports, the average pay of AIM chief executives rose 14.6 per cent over the past year to £268,036 – twice the level in 2003 – while UK inflation has only recently reached around five per cent. Finance directors enjoyed an average pay increase of 19.6 per cent to £159,472, 89 per cent above their 2003 level, and non-executive directors’ remuneration rose by the same percentage last year to an average £99,277, while the average pay of all AIM directors rose by ‘only’ 9.9 per cent to £624,181.
The number of chief executives receiving £500,000 or more grew from 51 to 86. Meanwhile, 173 companies paid more than £1 million each to their combined boards, up from 120 the previous year and 59 in 2006.
Among the stars, Philip Richards, ex-chief executive of former high-flying resource-oriented investment group RAB Capital, received £7.8 million, comprising a £102,000 basic salary and a £7.7 million performance bonus (of which £3.5 million went to charity). Since then, stock market setbacks and fund redemptions have sent RAB’s shares crashing from 125p to 6.54p.
Oil explorer Dominion Petroleum, which is not yet generating profits, gave its finance director a £5.1 million remuneration package and has seen its shares plunge from 64.5p to 6p. Peter Whitbread, chief executive of Isle of Man-based oil and gas sector engineering specialist Lamprell, received £4.4 million after a 112 per cent profits increase (slowed to 33 per cent at this year’s interim stage).
Lamprell has moved up to the main London Stock Exchange list, but sector concerns have sent the shares down from 575p in June to 150.25p. Richard Brindle, chief executive of insurer Lancashire Holdings, had his remuneration hoisted tenfold from £390,000 to £3.9 million under a complex formula with two forms of bonus, but at least Lancashire shares, at 346.5p, are within hail of last year’s 380p peak.
The research is based on information taken from the last annual report and accounts of over 1,000 AIM companies. The full report looks at the pay of the largest companies by market cap, sales and profits, as well as examining how pay packages differ between sectors.
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