AIM 100 Directors' Remuneration Report

The past few years have been difficult for us all and there is still trepidation in the air when one looks to the future, with the cost of living crisis very much in the spotlight.

In an interesting article produced by BDO and written by Charles Ellis, Audit Partner, which looks at the Alternative Investment Markets (AIM) top100 and compares the executive pay median salaries for each role to assess the extent to which median salaries have changed over a two-year period.

It is fair that geopolitical and economic circumstances as well as the impacts of the pandemic have impacted on the AIM which has created movement in the list. Accoring to the report, "Through this period, remuneration committees urged restraint around executive pay and many top-level executives, in the name of workforce solidarity and a priority towards steadying the ship, saw trimmed down remuneration packages. Last year saw some return to normalcy in the form of faster growing bonuses and variable benefits, and 2022 saw that trend hasten. It is important to note that this year’s awards will have been set well before the current cost-of-living crisis took hold. Now, with persistent inflation focusing public attention on cost-of-living pressures and worker pay, there is good reason to expect scrutiny of executive pay-outs to intensify.

Shareholders will also be expecting to see clear links between C-Suite pay and performance indicators. While the average market capitalisation of AIM 100 constituents has fallen markedly (by 37%) between November 2021 and November 2022, the average director remuneration has risen without exception.

The coming year presents another tumultuous period for remuneration committees where sensitivity towards workforce conditions will need to be at the forefront of consideration.

Moving forward, it will be critical that values-based measures are incorporated into remuneration packages if remuneration committees wish to bolster support amongst shareholders. Environmental, Social and Governance (ESG) components are already a commonplace for FTSE 100 executives and it appears that AIM 100 peers may be beginning to take up the mantle as well."

The edited highlights are:

• The median salary for CEOs in 2022 is £386,000 and total median remuneration is £904,000. The total median remuneration is £565,000.
• The median FD and CFO salary is £265,000, an 8% annual increase from three years ago.
• At least 80% of CEOs, FDs and CFOs received a bonus in the current year. Bonuses for CEOs made up 35% of their total remuneration package, compared to FDs and CFOs where bonuses made up 29% on average.
• Gender diversity has improved on AIM 100 boards though representation remains low at 19% for female board members. One fifth of AIM 100 boards still have no female representation.