So how do you get paid? Do you receive cash? Does your company prefers the barter system and pay you in goats? If you’re the chief executive of a company about to float on the AIM market there’s a strong chance a goodly proportion of your remuneration comes in the form of share options.
According to a report published by Deloite today, the average inherent share option gain for the chief executive of a newly floted AIM company is Â£500,000, with other executives making Â£294,000.
James Ferguson, AIM partner at Deloitte, commented: “Companies floating on AIM are moving away from long term incentive plans for their executives (only 10% this year compared with 14% last year), with 90% introducing some form of share option plan (compared with 86% last year). This contrasts with the market practice of companies already listed where long term incentive plans (where free shares are provided to executives subject to the fulfilment of specified conditions) are increasingly the share plan of choice (particularly amongst larger companies).”
“The increasing use of share options by AIM companies is the result of a number of factors, including the fact that companies coming to AIM are arguably more optimistic about the prospects of share price growth than companies already listed. As a result, share options (which are typically more geared) may appear to be a more attractive option than long term incentive plans. Other factors also include the potential accounting costs of granting options pre-IPO, which may be less of a concern for companies seeking to list on AIM than for established listed companies. In addition, companies coming to AIM typically tend not to want to have performance targets attached to their pre-IPO awards.”
© Investment & Business News 2013