Share plans lead to 27% pay rise for executives

Senior executives have seen their earnings rise by more than a quarter over the last 12 months due to an increase in the value of share-based incentives, a report has claimed.

Incomes Data Services (IDS) said directors of companies in the FTSE-100 had seen their basic salary and bonuses stall but there had been major increases in how much long-term incentive plans (LTIPS) were worth. This has led to a 27% rise in their total average earnings.

The IDS report said LTIPs were now worth an average of 938,000 for directors - 81% more than in 2011. And the plans are now worth 1.6 million for FTSE-100 chief executives, taking their average total earnings to 4 million in the year to June.

But the research showed that the basic wage of directors increased by only 3.9% while their bonuses actually decreased by 4.9%.

Steve Tatton, of IDS, said levels of basic pay remained stagnant in the current climate for a number of reasons including political pressure, shareholders wanting to keep costs down and the struggling economy.

But he said the study showed that directors could still receive a sizeable increase in earnings from incentive packages.

He said: "While shareholders will be pleased to see more traditional elements of pay seemingly slowing, these figures show that directors' earnings can still grow significantly as a result of a complex mix of incentives."

Over nine out of 10 FTSE-100 companies use LTIPs, which are designed to motivate directors to perform well over a long period.

Copyright Press Association 2012