2.08 Non-executive fee changes are shown as [n]% for every director, although the footnote says they are based on total fees paid and one director's total fees fell
UK Company B · a UK-listed technology and logistics group · Presentation point
In brief
The table comparing directors' pay changes with UK employees shows a [n]% rise in fees for every Non-Executive Director (NED) for 2023/24. Its footnote says the NED figures are [wording masked] for the period. One NED's total fees in the audited fees table fell from [amount] to [amount], so on the stated basis his change is a small fall, not a [n]% rise; [n]% is the rise in the basic NED fee rate.
The evidence, as filed
Screenshot withheld to protect the company’s identity: Annual Report 2024, page 141; Annual Report 2024, page 137. Their wording or layout could lead back to the company even with names and figures masked; the evidence list below records what each page shows.
What the report shows, and what the rule requires
| What the annual report shows | What the rule requires |
|---|---|
| What the annual report shows Every NED row shows [n]% for 2023/24 salary/fees; footnote 4 says the NED change [wording masked]; the audited fees table shows one NED at [amount] (2024) against [amount] (2023). | What the rule requires Either the change in each NED's total fees as the footnote says (a fall of about [n]% for the NED concerned), or a footnote saying the figures show the change in the fee rates for unchanged roles. |
Why it matters
A reader comparing director and employee pay changes is told the NED figures are total-fee changes; for at least one NED the printed figure is a fee-rate change in the opposite direction. The table is part of the Directors' Remuneration Report on which shareholders vote.
Exposure
Presentation point in an advisory-vote report; no restatement of any audited figure is needed.
Our workings
the percentage-change table on p.141 prints [n]% in the 2023/24 salary/fees column for each NED, and footnote 4 says the change in NED fees '[wording masked]'. The audited NED fees table on p.137 shows the NED concerned at [amount] for 2024 and [amount] for 2023. The same page says the basic NED fee rose from [amount] to [amount].
the change in that NED's total fees is ([n] - [n]) / [n] = -[n]%. Allowing for rounding of the £'[n] figures, the change can be no better than ([n] - [n]) / [n] = [n]%, so a [n]% rise cannot come from total fees. The basic fee change is ([n] - [n]) / [n] = [n]%, which is the figure printed for every NED.
For the NED whose fees fell (presumably a change in roles), the table shows the opposite direction from the stated basis.
| Item | 2023 (£) | 2024 (£) | Computation | Result |
|---|---|---|---|---|
| NED concerned: total fees (£'[n]) | [n] | [n] | ([n] - [n]) / [n] | -[n]% |
| Same, most favourable rounding (£'[n]) | [n] | [n] | ([n] - [n]) / [n] | [n]% |
| Basic NED fee rate | [n] | [n] | ([n] - [n]) / [n] | [n]% |
Management’s best defence, and our reply
The Committee could say that the change in fee rates is the more meaningful comparison with employee pay rises, because a NED's total fees move with committee roles taken up or given up, and that the [n]% is exactly the increase applied to every NED fee. It could add that the footnote's 'total fees' was meant as the total fee rate for the roles held. However, the footnote says the change [wording masked] audited fees table, and that table shows a fall for one NED; a reader following the footnote cannot reproduce [n]%. The rate basis may be a sound choice, but the footnote must then say so.
The fix
- Show each NED's change in total fees (annualised where the director did not serve both full years), or reword footnote 4: '[wording masked] shows the change in the fee rates for their roles.'
Evidence relied on
| # | What it shows | Type | Where |
|---|---|---|---|
| 1 | The table shows a [n]% rise in this NED's fees for 2023/24 | Document | Annual Report 2024, page 141 |
| 2 | Footnote 4 states the basis: the change in total fees | Document | Annual Report 2024, page 141 |
| 3 | Audited fees table: this NED's total fees were [amount] in 2024 against [amount] in 2023 | Document | Annual Report 2024, page 137 |
| 4 | The basic fee rate rose by [n]%, the figure printed for every NED | Document | Annual Report 2024, page 137 |
Prepared by Pramanex from the company’s published annual reports, without the company’s involvement, to show how an annual report review reads. The company is not named, and nothing on this page is a statement about any identifiable company. Observations are not an audit, review or other assurance engagement, and not legal advice. A regulator-style question is a question, not a conclusion.
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