‘Performance’ measures dominating executive pay

Executive remuneration packages at FTSE 350 companies are becoming
increasingly dominated by performance-based elements of pay, a study by Deloitte
has found.

The Big Four firm’s Measuring Up report found that performance
measures used by these companies are increasingly aligned to a company’s
business strategy

In an average year, incentives account for around half of total pay, often
rising to around 80% for significant outperformance, the report found.

Andrew Page, a director in the Deloitte remuneration practice, said:
‘Shareholder views are having a major impact. An increasing proportion of
executive pay is now performance-related and companies are applying more
stringent and bespoke performance measures, not just linking it to total
shareholder return (TSR).’

Furthermore, Page said there was now also greater transparency with around
85% of FTSE 350 companies disclosing details of the performance measures used in
executive incentive plans.

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