FTSE 100 firms respond to pressure for pay shake-up - study

LONDON, Sept 4 Wed Sep 3, 2014 7:01pm EDT

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LONDON, Sept 4 (Reuters) - Over three quarters of FTSE 100 companies have changed pay arrangements in the past year in response to new disclosure rules and increasing scrutiny from shareholders, a study has found.

A Deloitte report published on Thursday showed that many firms are seeking to better align the interests of directors and investors by focusing more on the longer term, increasing the shareholding requirements for directors and introducing simpler remuneration structures.

"This year we have seen an unprecedented amount of change to remuneration structures, undoubtedly prompted by more dialogue between companies and their shareholders following the new requirements on disclosure and voting," Deloitte remuneration team partner Stephen Cahill said.

Politicians are encouraging investors to hold companies to account more and have given them new powers, with shareholder votes on pay made binding in Britain under new legislation in October 2013.

Deloitte's report showed salary increases rose on average by 2.5 percent, with 35 percent of chief executives receiving no salary increase. The number of firms which handed out increases of over 3 percent fell from 25 percent last year to 16 percent.

The median bonus payout across all FTSE 100 companies in 2013 was 70 percent of the maximum opportunity, compared with 87 percent four years ago. In the top 30 companies, payouts were lower with a median of 58 percent of the maximum opportunity.

Deloitte said 35 firms had also introduced new long-term incentive plans in the last year, more than at any time in a decade. The number of firms with more than one long-term plan fell from almost 50 percent a year ago to less than 30 percent.

Almost all companies now expect directors to hold a minimum number of shares, the report added, with over a quarter of companies raising the minimum requirement in the past year.

After the "shareholder spring" of 2012, when a number of investors abandoned their traditional back-seat position on the management of companies, last year's round of annual shareholder meetings was a much more subdued affair.

However, investors returned to a more active stance this year, with several shareholders rejecting resolutions at blue-chip firms including Barclays, AstraZeneca , Pearson and Standard Chartered. (Reporting by Neil Maidment; editing by Susan Thomas)

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