BusinessCompany NewsFDs hedge bets with 2007’s biggest pay rises

FDs hedge bets with 2007's biggest pay rises

FDs given big pay rises as compensation for increased risk of being sacked in the event of a takeover

Finance directors of the UK’s biggest companies were given larger pay rises
than any other board members in 2007 in a bid to compensate for being removed in
the event of a private equity takeover.

Remuneration boards went the extra mile to retain the finance heads because
of the increased risk of being sacked should their companies be taken over by
investors.

Last year Martin Stewart, FD at EMI, departed after Terra Firma took control
of the company.

Speaking at the Corporate governance in practice conference, KPMG partner
Mary Carter said: ‘Every single company we spoke to was worried about the threat
of private equity and they were saying “we’ve had to pay everybody more” to keep
them.’

At the very top of the food chain, FTSE100 FDs with base pay in the upper
quartile, the boost was 13%, with their CEOs on 10%. In the FTSE250, FDs were
given pay hikes of 14% while chief executives received 11%, according to KPMG
figures.

Companies also saw the need to keep FDs on-side because of the M&A boom
in 2006 and the early part of 2007 leading to a more strategic role on the
board.

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