#ceo's

Limited (public) company directors often receive shares in the company they are employed in as part of their salary. These shareholdings can be substantial and the dividends they receive from these shares can be considerable, especially as income from dividends is taxed at a lower rate than PAYE income.

Under the PAYE scheme ordinary working people start paying tax at the following rates:

TAX BAND                           TAXABLE INCOME                      TAX RATE

Personal allowance                 Up to £12,570                              0%

Basic rate                                £12,570 – £50,270                      20%

Higher rate                              £50,270 - £125,140                     40%

Additional rate                         over  £125,140                              45%

If you are fortunate enough to have unearned income from company share dividends the rates are as follows.

Basic rate             8.75%

Higher rate            33.75%

Additional rate       39.35%

There is a trend in big business for mandatory director share ownership:

“Research by consultants William M Mercer has found that nearly a third of the top 100 businesses in the UK now require top executives to have a substantial shareholding in their company. Some directors must own as much as five times their salary in company shares.” (ereward: 27/02 2017)

Even at lower income levels, company directors can make substantial tax savings.

On a total salary of £50,270, a company director can, by taking much of their salary in share dividends throughout the year and by having their non-dividend salary below the National Insurance threshold, only pay a total tax bill of £3,255.

If you or I earned £50,279 we would pay a total of £11,310 in taxes.

At the other extreme we have Pascal Soriot, the CEO of AstraZenica, who is reported to be in line for a £18.9 million salary this year. However:

“… a scenario outlined in the firm’s annual report showed the total amount could be boosted to as much as £25million if the shares were to rise by 50 per cent.”  (This is Money: 20/02/24)

Soriot has a base salary of £1.43 million per annum, the bulk of his massive income being made up by other payments. . For most people Soriot’s basic salary is beyond their wildest dreams, and to be paid nearly £19 million is obscene. I don’t know how much (if any ) of Soriot’s income comes from share ownership and dividends,  as this information is near impossible to find out.

What we do know is that “insider individuals” – board members and other top managerial officials of AstraZenica  – own at least £41 million worth of AstraZenica shares. (Simply Wall St: 20/01/22.)

 As well as having assets worth £41m, these “insider individuals” will receive dividend payouts on their share holdings, and if paying tax in Britain will enjoy considerable tax benefits unavailable to the majority of hard working people in this country.

In my latest post via TheMedium.com, I wanted to explore something you learn from looking at sports executives across all sports all over the world.