Chief executives of companies listed on the Alternative Investment Market (Aim) enjoyed a pay rise of 10.8% in the last financial year – three times the rate of salary growth across the UK – despite a plunge in shares across the market.
The basic pay of Aim bosses rose to an average of £198,706 after the increase, according to the Incomes Data Services (IDS) executive compensation review, published today. The increase was well above the growth rate of pay across Britain in 2008, which was 3.6%.
Over the same period, the Aim all-share index, made up of Britain's publicly traded smaller and medium-sized companies, fell by 60%, the study said.
The salaries for all other directors of Aim companies increased by 10.2% on average, while the salary increases for finance directors lagged slightly at 8.2% over the same period. "The credit crunch and the economic downturn has been difficult for shareholders of Aim companies so double-digit growth in Aim chief executive salaries may come as a surprise to them," said Steve Tatton, of IDS. "At a time when shareholders are getting such a poor return from their investments, they do look for remuneration committees to exercise restraint."
There has been a growing backlash against excessive pay, driven by public anger about the size of bonuses awarded in the banking industry.
Accordin to IDS, bonuses for Aim chief executives did fall as more companies missed their targets – with the median bonus dropping from £30,500 to £13,500. But Tatton noted that median earnings (basic salary plus incentives) had gone up from £190,500 to £200,039, which suggests that companies are making up for lower bonuses with higher basic salaries and other perks. "It seems that as incentives went down, salaries go up," IDS said.
"One point of concern is that as bonus schemes failed to pay out, a number of companies revised their incentive schemes to account for the more difficult business circumstances," Tatton said. "That means lower profitability targets before the chief executive gets their bonus."