Code User Group Blog: April 2025

This month's user group focused on director remuneration. 

The session started out by clarifying the difference between an executive director, non executive director and a regional/product director. 

Jon quickly worked through the director hierarchy (in pay terms):

• CEO

• CFO

• CTO

• Other executive directors

• Chairperson

• Regional / product directors 

• Non-execs

It was noted that in the US roles such as Vice principal / Chair can differ  with some holding a dual chair/CEO role. 

Jon then discussed how there is often role elevation in certain sectors such as investment banking and consultancy where mid level staff are also called directors. However the core focus for today's session was board level executive directors. 

Jon then shared some data showing that US executives were paid considerably more than those in the UK, but in the last 12 months this gap has narrowed slightly. What was interesting was bonuses were up quite strongly during 2024 despite some of the economic turbulence. It was pointed out that bonuses and especially dividends are typically used to give bigger donations, given salaries are often ‘accounted’ for in personal budgeting. 

Jon also noted that it is important to appreciate that executives operate within global marketplace for their talent and as such salaries in public vs private firms are not as different as many first think. The top 50 listed companies will clearly see executives paid the most, but below that differences can be minimal. It was noted that the composition of pay between public and private companies is different as bonuses in public companies are typically a mixture of cash and shares (all shares for LTPS) whereas in private companies it is normally all cash (thus making better donation potential).

Jon then went on to discuss the fundamental components of director pay

• Base salary

• Bonus

• LTRs

Following some questions from Code-FI users jon outlined why a director might be getting paid 0. This included:

• Inactivity:  The company is reported as Dormant or there is no trading activity.

• No Employees Reported: As directors are also employees, directors will not have received any remuneration directly. Jon stressed the importance of checking if the company is part of a holding company or group where the individual may be receiving remuneration from instead. Earnings may also be received if they are Owner or Shareholder via Dividends or invoicing via their own company. 

• Total Director Remuneration reported is £0

• Limited Financial Activity: the company is showing limited evidence of financial activity that would indicate a remuneration for directors.

The session then proceeded to discuss where a director is getting paid 0, it's unlikely that they will be working for free. Therefore reviewing the group structure is important as it will highlight where the director is ultimately getting paid from, ie:

• Group

• Holding company

• Private equity

• Venture capital etc

We mentioned typical bonus periods, normally at the very end or start of the year and reviewed an example of director remuneration report in the Next Plc annual report. 

Any questions from todays session please drop us an email.