Share options are popular choice among executives of newly listed AIM companies |
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Published
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Mon, 12 Jun 2006 13:35
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LONDON - Chief executives of newly floated companies on the AIM make an average of 500,000 pounds after any new floatation. The most common and popular form of remuneration for such executives is share options, according to new research from accountancy group Deloitte.
The study examined 84 companies that were floated last year and found that many companies used share options in stark contrast to bigger companies. "Companies coming to Aim typically tend not to want to have performance targets attached to their pre-IPO awards," James Ferguson, Aim partner at Deloitte.
He added that the main reason for the use of share options was the fact that smaller companies tended to be "more optimistic about the prospects of share price growth" than bigger companies. "This contrasts with the market practice of companies already listed where long-term incentive plans -- where free shares are provided to executives subject to the fulfillment of specified conditions -- are increasingly the share plan of choice," he added.
All companies in the study had a market valuation of more than £25 million and netted their chief executives an average of £150,000 before bonuses. The study also found that companies having market capitalization of more than £250 million increased the maximum awards to 150 percent of the salary.
A surprising finding was that fewer directors had contractual pension arrangements. Only 54 percent of those surveyed had such arrangements as compared to the 70 percent last year.
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