RREV's new report, Trends in Executive Remuneration 2005, highlights that it has now become market practice for companies to consult shareholders and shareholder representatives when introducing any significant change to executive remuneration arrangements. In a considerable number of cases, a company will include RREV in this consultation process and RREV received over 150 such approaches during 2005.

The report details trends in executive remuneration based on company reports in 2005. Median chief executive salaries increased by 10% in the FTSE 100 and by 11% in the FTSE 250 and the FTSE SmallCap. Maximum potential bonuses have also increased at a number of companies. Bonus targets are rarely disclosed therefore it is hard to determine whether these have become more challenging to accompany the increases in bonus limits.

RREV is encouraged by the greater use of multiple performance measures in long-term share schemes and, in some companies, the greater use of measures tailored to company strategy. This indicates greater sophistication in the market, which can at least partly be attributed to productive discussions between companies and shareholders.

However, the report highlights a wide variety in the level of disclosure provided by companies about annual bonus plans and disclosure of the performance targets. Whilst recognising that companies consider that commercial sensitivities make it difficult for them to provide detailed disclosures in advance, RREV's position is that there is little justification for the lack of acceptably detailed retrospective disclosure of the targets and associated performance after the performance year has ended.

The report notes bonuses tied to performance made up an increasing proportion of total pay in accordance with corporate governance guidelines but it also notes that some companies had stopped deferring bonuses and were paying annual bonuses immediately in cash, a change contrary to best practice.

The report further notes that the lifetime limit on pensions takes effect from April 2006 and highlights that there was little disclosure in 2005 company reports on companies' intended approach. It states that although RREV would expect companies to make changes for tax efficiency purposes, it would not expect shareholders to bear additional costs as a result of any new arrangements.