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Company examples and trends in key areas of remuneration policy in FTSE 100, mid-250 and SmallCap companies - November 2022


Autumn is one of the quieter times of the year in terms of annual reporting but there were still a number of prominent companies publishing their remuneration statements in the latest period. 

This time, 35 new companies were added to the database and while it might be unwise to make wider generalisations from a relatively small number of company reports, many of the developments observed seem likely to continue into next year.

This is because many of the trends detected are being driven by both the current economic turmoil and the corporate governance environment and neither is likely to change anytime soon. In addition, most of the latest developments also represent continuations or refinements of previous ones we have reported on and are part of longer-term shifts in policy.

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In-depth look at developments

With the ongoing cost-of-living pressures facing everyone in the country it is perhaps unsurprising that in the latest period there were more details on how companies were helping their employees weather the current storm.

Many firms have put in place initiatives to support their employees which fell into five main categories:

  • One-off payments.
  • Wellbeing initiatives.
  • Living or minimum wage-related increases.
  • Benefits enhancements.
  • Enhanced salary rises.
One-off payments

In the latest period there appears to have been an acceleration in the number of companies outlining special initiatives designed to ease financial pressures on their staff. Examples included one-off share plans and additional non-consolidated payments, often targeted at the lowest-paid employees and sometimes accompanying other initiatives to provide staff with help.

Wellbeing initiatives

Firms also outlined some of the other forms of support they are providing to their staff and the list is long and varied. Some forms of aid directly benefitted staff while others are designed to educate employees so they can gain the tools themselves to cope with the challenges of modern life.

Salary rises

Another way in which firms are trying to support their staff is via salary rises and while the pay rises we found rarely matched the current high level of UK inflation, there were some significant increases awarded. Remuneration committees are responsible for pay arrangements throughout their organisations and we collect data on pay movements of all the groups where it is disclosed.

Pensions aligning at different levels

The alignment of directors’ and staff pension levels is nothing new with the trend having continued for the last few years. As we reach the end of December 2022, the pension levels for directors in most companies will be equal to those of the majority of their staff with just a few exceptions. Now that we are reaching the endpoint of the alignment process, it is clear that staff rates (and therefore the newly-aligned director rates) exhibit quite a high degree of variation across companies.

For example, some directors’ pensions are now as low as 3% of salary, as at Rank while, on the other hand, rates at other firms can be over four times higher as at Diageo where the rate is 14%. As a result, by focusing on internal alignment, investor guidance implies external misalignment.

Whether or not these differentials are likely to pose problems in the future remains to be seen but given that directors themselves often keep a keen eye on what their peers are earning, possible unforeseen consequences could emerge. 

ESG developments

Over the last few years, ESG measures have become more and more prominent within UK remuneration policies so the E-reward database has evolved to keep pace with the changes. Currently, we record 24 different performance measure categories and the list of ESG targets includes:

  • Safety-related

  • Customer-related

  • Employee-related

  • Other ESG targets (environment, climate, diversity, culture etc).

It is this last category where most of the growth has come from in the last few years.

One question that remuneration committees seem to be asking themselves in relation to this area is how to incorporate such targets. Some companies believe progress is likely to be quicker if they are included in their annual bonus plans while others believe the long-term nature of many ESG targets means it is more appropriate that they are part of longer-term incentive plans.

Of course, there are arguments in favour of both these viewpoints which is why some organisations use ESG metrics in both their long- and short-term incentive plans. By contrast, some companies are yet to include ESG performance measures within their incentive arrangements although often they mention that it is an area that they are considering.

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Case studies

Veon Limited

VEON Ltd. is a Dutch-domiciled Nasdaq-listed multinational telecommunication services company. It predominantly operates services in the regions of Asia, Africa and Europe.

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Martin Baker Aircraft

Martin Baker make the ejection seats for installation in many of the world’s air forces globally. They remain an ‘old fashioned’ family-owned engineering company despite being the world leader in their field.

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Trufin plc

London Team were selected to act as ‘neutral independent advisors’ on the divestment of assets by a major Fund Management Partnership to form a new company: ‘Newco’, eventually TruFin plc, the listed fintech business

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Hawk-eye Innovations

A private company with unique sports technology IP, developed in the UK. The IP had wide applications globally, and huge growth potential. The company was acquired by a world-scale corporation

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Knowledge Hub

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The 2022 UK CEO Value Index

Published annually since 2012, the CEO Value Index aims to provide a unique insight into pay-for-performance. Our database allows us to understand how Remuneration Committees invest in their top executives, and the lessons learned.

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