London, UK – A report on directors' remuneration by Hewitt New Bridge Street, the UK's leading executive remuneration specialists, has highlighted the limited levels of pay disclosure by AIM 100 companies.

The 2009 Report on FTSE AIM 100 Directors' Remuneration is the first of its kind to look in depth at executive reward among the largest companies on AIM.

Key Survey Highlights
Total reward

• The median salary of AIM 100 highest paid directors (typically the CEO) is around £230,000. The median total reward is around £460,000.
• Total packages are 30-40% smaller than in equivalent sized FTSE SmallCap companies. 

Fixed versus variable pay

• Around 65% of the total reward package is fixed for AIM 100 companies, compared to only 55% in FTSE SmallCap companies.

Long term incentives

• Unlike FTSE SmallCap companies, the most common long term incentive arrangement among AIM 100 companies is the sole use of an option plan as opposed to Long Term Incentive Plans (LTIPs). 
• AIM 100 highest paid directors received long term incentive awards last year with an expected value of 43% of salary at the median (equating to an option grant over shares worth around 215% of salary).
• Earnings per share (EPS) is the most common performance metric in option plans.

Pensions

• The most common form of pension provision is via a Defined Contribution (DC) plan - 55% of directors receive this. However, over a third of directors receive no formal pension.
• The median contribution for executive directors is 10-15% of salary.

Disclosure

• Only 65% of AIM 100 companies publish an executive remuneration report – with a minority putting this to a shareholder vote.
• 21% of companies disclose their bonus cap.

Commenting on the findings, Rob Burdett, a Principal at Hewitt New Bridge Street, said:

"The debate over executive remuneration continues to intensify. While this has focused on FTSE mid and large cap companies to date, there is little doubt this will become an important issue for all quoted companies and their shareholders.

"AIM companies currently offer very limited information on remuneration structures, as they are not required to do so. While this reflects a less heavily regulated market, in the interest of allaying shareholder concerns and meeting international best practice, these companies should consider adopting a more transparent approach."

Total Remuneration

Total reward is around 30-40% lower in AIM 100 companies compared to equivalently sized FTSE SmallCap companies. The median total reward for highest paid directors is around £460,000 among AIM 100 companies.

Hewitt's research also shows that AIM packages are weighted more heavily toward fixed pay – typically 65% of the package is fixed compared to around 55% in equivalent FTSE SmallCap companies.

Rob Burdett said:

"The onerous regulatory framework of the main market is reflected in the variance in the pay packets between FTSE SmallCap and AIM 100 companies. However, I am surprised to see greater emphasis on fixed pay among AIM 100 companies. While some directors may be founder shareholders, and thus clearly incentivised by business performance, companies may be missing an opportunity to motivate executives via variable pay elements, such as bonuses or long term incentives, with reward dependent on challenging performance targets."

Where disclosed, the median annual bonus potential of AIM 100 executive directors is 100% of salary, whereas bonuses paid in 2008 were typically 40-45% of salary. However, given current the economic conditions, bonus levels for this year are likely to be lower.

Long-Term Incentives
The majority of AIM 100 companies are still operating option plans and have not participated in the trend towards Long Term Incentive Plans (LTIPs) to the same degree as fully-listed companies.

Rob Burdett said:

"A pillar of UK best practice is that awards are made subject to challenging performance conditions. However, AIM 100 companies appear to have resisted the move towards LTIPs which offer a closer correlation between management performance and reward in comparison to options where absolute share growth can be impacted by external factors."

Pension provision among AIM 100 companies is predominantly a DC scheme, where provided. However, a third of directors do not receive any formal pension provision.

About Hewitt New Bridge Street  
Hewitt New Bridge Street is the UK's leading executive remuneration consultancy that is the named adviser in the Director's Remuneration Reports of 35 FTSE 100 and 90 FTSE 250 companies. We have a single focus—to assist companies design and implement executive remuneration practices which will help them meet their business objectives.

About Hewitt Associates
Hewitt Associates (NYSE: HEW) provides leading organisations around the world with expert human resources consulting and outsourcing solutions to help them anticipate and solve their most complex benefits, talent, and related financial challenges. Hewitt consults with companies to design and implement a wide range of human resources, retirement, investment management, health management, compensation, and talent management strategies. As a leading outsourcing provider, Hewitt administers health care, retirement, payroll, and other HR programmes to millions of employees, their families, and pensioners. With a history of exceptional client service since 1940, Hewitt has offices in 33 countries and employs approximately 23,000 associates who are helping make the world a better place to work. For more information, please visit www.hewittassociates.com/Intl/EU/en-GB/Default.aspx.

Other Contacts
Anna Mitchell, Capital MS&L, on 020 7307 5346 or anna.mitchell@capitalmsl.com
Supriya Mathur, Capital MS&L, on 020 7307 5347 or supriya.mathur@capitalmsl.com