The average pay of AIM-listed CEOs and CFOs is substantially lower than their counterparts in other sectors despite average share prices in the sector outperforming the wider market, according to a new report from Grant Thornton.
The review looks at the remuneration packages of senior executives at publicly listed UK technology companies and is based on the 2011/12 accounts of tech sector firms on the London Stock Exchange’s Main and AIM markets.
Report findings show 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-than-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 study also highlighted that, despite this strong share price growth, AIM technology CEOs’ gains from their share awards averaged around a fifth (19.6%) of the all-sector AIM market average.
Alison Seekings, partner at Grant Thornton’s Cambridge office (pictured), said: “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 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 shareholders.”
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