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AIM listed companies shift to mirror best practice in executive pay

AIM listed companies are changing their pay structures

Companies listed on the AIM market are changing their executive pay structures to be more in line with the FTSE350.

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  • A greater proportion of total executive remuneration comprises variable elements
  • Shift continues towards performance share plans
  • AIM market has a way to go to address gender diversity

Companies listed on the AIM market are changing their executive pay structures to be more in line with the FTSE350, according to KPMG’s latest guide to executive remuneration in AIM listed companies.

The shift is in part due to institutional shareholders increasingly expecting AIM companies to demonstrate higher governance standards as well as the 2018 AIM changes under which companies are required to state which corporate governance code they are applying. 

The guide includes an overview of salary, bonus and long-term incentives across the executive population, alongside other current issues affecting remuneration. For the first time, the guide shines a light on gender diversity in board level positions in AIM listed companies.

Additional findings since the last survey in 2016 show the following:

  • Long term incentives - there is a continued shift in approach to long-term incentive plans away from market value options to Performance Share Plans
  • Total remuneration - a greater proportion of total executive remuneration comprises of variable elements; just over one third (36%) of a Chief Executives total remuneration in AIM companies is variable compared with just over 20% from our analysis in 2016. 
  • Diversity - across the executive director population in this survey group, only 7% are currently women suggesting the AIM market has a long way to go to address gender diversity.
  • Basic Salary - more significant increases to base salary than seen in the wider main market but at a more modest level than has been in the past. The typical basic salary annual increase for Chief Executives across AIM was around 6%. 
  • Regulatory - 42% of the Top 50 AIM companies have chosen to adopt the UK Corporate Governance Code although adoption of the Quoted Companies Alliance (QCA) Guidelines is more common place.
  • Annual Bonus - the typical annual bonus opportunity for AIM directors is 100% of salary. 
  • Non-executive directors - around a half of AIM companies increased non-executive director fees for the year under review.

Chris Barnes, Partner and UK Head of Reward at KPMG, said: “Although the AIM market generally remains less in the public eye and regulations are less prescriptive compared to the main market, we are seeing a shift in more AIM companies adopting best practice when it comes to executive pay. This will only continue as institutional investors expect higher governance standards and as companies conform to recent changes to AIM rules in 2018. 

“Against this backdrop remuneration levels at the upper end of the market are not dissimilar to those found among comparable sized businesses in the main market. Further the focus on gender diversity in board level positions also shows that AIM companies have a long way to go to even match levels found in the main market.

“On the whole, while there is a clear direction of travel towards AIM companies adopting practices more associated with main market companies, it should be remembered that there is a wide variety of companies listed on AIM both in terms of their size and shareholder base. This means that one size does definitely not fit all when it comes to executive remuneration.” 

 

ENDS

 

Notes to editors:

For media queries only, please contact:

Ed Fotheringham Smith, PR Manager

T: +44(0) 7920 572490

E: Ed.FotheringhamSmith@KPMG.co.uk 

  • You can find the full report here.
  • In order to provide a guide for companies and remuneration committees, the report provides data on basic pay and incentives. 
  • This guide is based on data gathered from external providers (see methodology in the report) and includes data from 213 companies including annual report and accounts published for financial year ends up to and including September 2018.
  • Data is included only for those companies disclosing sufficient detail to allow robust analysis.
  •  KPMG is one of the UK’s leading advisers on employee incentives and executive remuneration. We are a member of the Remuneration Consultants Group and signatory to its Code of Conduct. 

 

About KPMG

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