...despite strong share price growth
A review of the remuneration packages for senior executives at publicly listed UK Technology firms has found that average AIM-listed CEO and CFO pay was substantially lower than their counterparts in other sectors, despite average share prices in the sector outperforming the wider market.
The report (Rewarding Performance: Executive Pay in the Tech Sector), published by business and financial advisers Grant Thornton UK LLP is based on the 2011/12 accounts of Technology firms on the London Stock Exchange's Main and AIM markets. The report found that average total remuneration packages for CEOs of AIM Technology companies totalled £383,000 – less than half that of the whole AIM market average of £789,000. Similarly, CFOs / Finance Directors of AIM Technology firms received an average total package equating to £192,000 – substantially below the whole AIM market average of £469,000. The report also finds that where bonuses are paid to AIM Technology executives, they are low-level, with a significant number of AIM executives receiving no bonus at all.
The lower average remuneration packages come despite the sector's share price growth having consistently outperformed the rest of the market. The share price performance of AIM-listed Technology firms over the period shows a +30% differential in comparison to the AIM All Share Index. Over a longer-term five year analysis, this differential rises to as much as +53%.
The report also finds that, despite this strong share price growth, AIM Technology CEO's gains from their share awards (LTIPs realised) averaged around a fifth (19.6%) of the all-sector AIM market average.
Amanda Flint, Partner and Head of Executive Remuneration at Grant Thornton UK LLP, commented: "The substantial increases in Technology share prices – particularly on the AIM market – does not generally seem to have been rewarded by performance linked pay for CEOs and CFOs in the sector. If the UK Technology sector is to continue to attract and retain the 'brightest and the best', then it is crucial for remuneration packages to reward executives who create value for.