Spring is the busiest time of the year in terms of annual reporting. The UK banks often emerge first and these reports give us an insight into how policy might be shaped in the coming year.
More broadly, we focus on 57 new companies that have either been added to the database or have published remuneration reports in the last few days. What we found was very similar to previous periods but a notable feature of the latest disclosures is the amount of attention dedicated to measures to support staff both in terms of pay and well-being initiatives.
Previously, we reported that the most pressing concern expressed by companies was retention and while many of the latest measures are a reaction to economic and cost pressures, they may also serve to ease any recruitment and retention concerns.
Despite this, it should be noted that in almost all cases the support has been targeted at the most junior staff so will probably not mitigate any concerns regarding the retention of more senior staff.
Analysis of latest December 2022 banking reports
The latest annual reports from five of the UK’s largest banks are among the first that have December 2022 year-ends to be published so we have taken an in-depth look at what they contained. Some of the information that emerged that we collect foe our executive remuneration database included:
Most mentioned that they are currently considering the effect of proposed changes to the ratio of fixed to variable pay that could come into force in 2024;
Pay rises for staff tended to be historically large and focused on junior employees and areas with exceptionally high inflation;
Most of the banks provided special one-off payments to staff to support them during the current tough economic environment;
Many highlighted existing, extended and new well-being initiatives they operate and notable levels of ESG performance metric usage;
Bonus pools were higher in three of the banks and lower in the other two;
The latest vested LTIPs were granted at the depth of the pandemic but all the banks stated that no “windfall” gains were made.
In most of the banks, the majority of the vested amounts resulted from non-financial target achievement;
In terms of other changes, Lloyds and NatWest plan to increase bonus maxima to some or all directors;
Lloyds plans to move away from its restricted share plan back to a traditional LTIP in 2024 with a cap of 300% of salary.
The trend of new and developing ESG performance measures continues and we have outlined all the latest examples disclosed. One noticeable trend is that companies are refining their approaches and introducing new measures such as food and waste reduction.
Each time we produce a report of this type there are usually a number of examples that warrant further attention. On this occasion, a few examples stood out including:
- A new one-off revenue-growth incentive plan at Abcam with large potential rewards for its CEO and finance director;
- Multimedia company Future has decided it wants to travel in the opposite direction moving away from a value plan back to a traditional LTIP but not until the prior plan has run its course;
- Mitchells and Butler missed its LTIP underpin but its committee argued that this was due to reasons out of its directors’ control so it plans to extend the condition;
- The pub company also made changes to its in-flight bonus targets but at the same time reducing the potential reward available;
- Travel company On the Beach introduced a new restricted share plan due to the volatile environment.
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