FTSE 100 remuneration disclosures for the 2023 AGM season

Policy Reviews

 As of June 2023, around 50% of FTSE 100 companies put forward a new Policy for approval, and by and large proposed relatively minor changes such as tightening up malus and clawback provisions, strengthening post-employment shareholding requirements or formalising changes such as pension reductions for the executive directors.

 A quarter of companies proposed an increase to the maximum opportunity under their short-term and/or long-term incentive plans although the median opportunity remains at 2x base salary for annual bonus and 3x for the long-term incentive. The median pension is 10% of base salary.

 Just a handful of companies proposed structural changes to their long-term incentive plan.

 Base Salary Increases

 The median base salary increase for executive directors was 4% which is below the median of the wider workforce (6%) in line with shareholder messaging and continuing a recent trend. Similarly, the median increase for non-executive directors was 4%.

 ESG

 The majority of companies have ESG related metrics in their annual incentive (90% of FTSE 100 companies) and long-term incentive plans (60% of FTSE 100 companies).

 Incentive Award Levels

 The median single figure for CEOs in 2022/23 is £4m.The median base salary for the CEO role is just over £1M, and around £600k for the CFO.

 The median annual bonus payout was 75% of maximum which is less than last year (87%) but a little higher than average over the last few years.

 The median long-term incentive award was 61% of maximum which is broadly consistent with the average of the last few years (although last year it was 50%).

 Just a handful of companies have adjusted their 2022/23 vesting of long-term incentives to account for windfall gains. Some companies had already reduced their 2020/21 awards at the time of grant to mitigate a risk of windfall.

 Proxy Voting

 ISS have so far provided ‘for’ recommendations for over 90% of remuneration reports, and 11% of policy renewals have received ‘against’ recommendations. IVIS have awarded just 4% of ‘red-tops’. Concerns raised cover either excessive or insufficient use of discretion, insufficient justification for increases to variable pay levels and inadequate evidence of pay for performance.

 Shareholder voting

 Shareholders have generally voted positively on policy reviews with on average around 93% in favour. Pearson and InterContinental Hotels Group received less than 80% in favour largely due to increases to the incentive levels.  

 Similarly, votes in favour of the annual report on remuneration have been strong with a similar percentage to the policy. Seven companies received less than 80% support, and notably almost 60% of shareholders at Unilever voted against the report largely due to the salary level to be paid to the new CEO (almost one-fifth higher than his predecessor). This vote against is one of only 13 such rejections at a FTSE 100 company since 2000.