UK firms are changing how they pay top executives to keep them from moving to the US
A growing number of UK firms are changing how they remunerate top executives in a bid to keep them from moving to the more lucrative US market.
While the UK is seen to offer stability and strong worker rights, the US has increasingly been positioned as a region with better pay and more opportunities for rapid career growth. Traditional UK pay gives you stock only if the company performs well. But when markets are volatile, executives can’t predict if they’ll get anything, making US guaranteed salaries more attractive.
Legal firm Travers Smith notes that a key theme of 2025 was the rise in levels of executive pay in the UK when compared with the rest of the workforce. UK companies, notably those that are publicly listed, often justified higher remuneration packages through the need to compete with other jurisdictions, particularly the US.
“As a result, some companies made greater use of hybrid plans, under which both performance-related awards and awards that are time-based but are not subject to performance conditions can be granted. However, shareholders are not always in favour of such arrangements and will need reassurance that they will create value for the company in the long term.
“As a result, they often expect awards without performance conditions to be smaller in size, subject to at least some level of financial underpin and for remuneration committees to have the discretion to reduce the amount paid out in the event that it doesn’t reflect the experience of other stakeholders.”
Notwithstanding the more flexible approach taken under its current guidelines, the Investment Association has recently cautioned against the overuse of hybrid plans, stating that they should be limited to businesses with a significant US footprint or which compete for global talent.
Increasingly on the agenda
Legal firm Burges Salmon notes that hybrid incentive plans are moving up the UK Remuneration Committee agenda because the standard Long-Term Incentive Plan is being asked to do two jobs at once: drive stretch performance and provide retention through volatility, inside a governance environment that is increasingly exacting on rationale, discipline and disclosure.
A hybrid Long-Term Incentive Plan is the UK market’s attempt to price retention without abandoning performance, the firm said.
The firm notes that a UK “hybrid LTIP” is typically a split long-term award:
- A performance-conditioned element (performance shares / PSP), and
- A time-based element (restricted shares / RSP),
This is usually delivered under one plan and one annual grant cycle.
“A good UK hybrid keeps the majority of value performance-based, discounts the restricted element and hard-wires the guardrails,” it said.
“UK expectations around vesting and holding periods mean equity is structured for sustained alignment. That is a strength. But it can also create long stretches where the next meaningful value moment feels distant, especially when performance outcomes are uncertain. A hybrid can improve the continuity of value at risk while keeping the overall alignment horizon recognisably UK.”
