Early insights from FTSE 250 Directors’ Remuneration Reports - 2025

By 17 April, 94 FTSE 250 companies had published their 2024 annual report and accounts. Just over one third (35%) of these are putting their remuneration policies to vote this AGM season (2024: 33%). This update, the second in our 2025 series, provides an analysis of key insights so far.

Policy changes

Following on from the initial bold moves observed during the 2024 AGM season, and building on the updates to the Investment Association ('IA') Principles of Remuneration and ISS Voting Policy Guidelines in the final months of last year, there has been a continuation of atypical changes proposed: fourteen companies, which represent 42% of the 33 companies tabling a new policy for shareholder approval, are taking approaches that can broadly be categorised as follows:

• Significant increases in pay opportunity (typically to variable pay), of which
• Increases to opportunity only [6 companies]
• Increases in opportunity together with changes to the structure of remuneration (for example, the introduction of alternative/portfolio of vehicles, typically the adoption of hybrid LTIs comprising a combination of restricted (RS) and performance shares (PS) [7 companies]
• One company has switched from a market-typical PSP to a RSP with no significant increase to total remuneration

Included in the category of changes to structure are companies that are differentiating the proportion of required bonus deferral depending on whether share ownership guidelines (SOG) have been met; most are reducing pre-existing requirements for those that have met the SOG, but some are introducing or increasing the requirement for those that have not [7 companies in total].

Around 30% of the above companies are citing the need for global competitiveness as part of their rationale for proposing these changes. Discussions held during our annual outreach exercise at the end of last year suggest that many investors will be open minded on such proposals at least in theory – but will expect each company to give a compelling and well-articulated rationale for any changes. We will report back on the outcomes of the AGM season later in the year.

Implementation changes

Although median increases are a little lower across both all employee and ED populations than last year, the ratio of EDs receiving salary increases relative to those of the wider workforce has shifted. In 2024, 55%-60% of EDs received increases below those of the wider workforce; this has now reduced to 40%. Conversely, around 40% of EDs are now receiving increases in line with those of the wider workforce, compared to fewer than 30% last year.

We also observe the following themes compared to last year:

• Decrease in application of downwards discretion applied to formulaic bonus out-turns
• Significant reduction in LTI vesting (as a percentage of maximum)
• No change to median incentive opportunities
• Continued growth in the number of companies increasing Chair and/or NED fees on an annual basis

Download our report to explore the full findings and gain a comprehensive review of remuneration outcomes for 2024 annual report and accounts thus far.

Contacts

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Karen Depoix

Director, Head of Research and Trends, Executive Compensation and Board Advisory, GB

email Email phone +44 7432 694148

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Paul Townsend

Senior Director, GB & Ireland Lead, Executive Compensation & Board Advisory

email Email phone +44 7989 210505

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