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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