What’s the Story?

The London Stock Exchange published a Discussion Paper “Shaping the Future of AIM” in April 2025.

The Alternative Investment Market serves early stage and fast growth companies with simpler rules than those of the Main Market. 

The LSE is eager to gather feedback from everyone interested in various aspects of the proposed changes to AIM. These include Directors Remuneration which intend to enhance both UK talent competitiveness and smooth access to equity pay for Non-Executive Directors. 

In addition to this news, for accounting periods ending on and after 1 April 2024, the 93% of AIM companies reporting under the QCA corporate governance code will need to adopt a directors remuneration policy. The disclosures and annual advisory shareholder votes relating to that item are first due in a few months therefore. 

Why Does it Matter?

The AIM Rules are subject to a comprehensive review and revision, that is healthy to maintain a strong market generally. 

The LSE also recognises that the long AIM history has added compliance complexity and cost. The review should ease those burdens and damp the seepage of high growth companies towards non-UK capital markets. 

Eased Director Remuneration and employee share plan governance rules should be welcomed by many companies too.  

However, this is not a governance item alone. AIM companies reporting under QCA governance code 2023 need to adopt a remuneration policy (see Paragraph 9). What that policy says and why is more important than the governance rules regulating protocol. 

NEDs paid partly in equity has long been seen for main market companies. NEDs in LTIPs however is frowned upon. The new AIM rules need to be clear on that distinction. 

Newspoint view

THE LSE has observed the need for UK competitive top pay against key OECD competitors for talent. This “Big Tent” debate has been ongoing for some time. 

Executive compensation is vital to business success. AIM companies are no different from others in this regard. 

Lighter compliance rules are helpful both for Directors and NEDs; but a deeper mind shift is needed.  

Strong equity incentives are needed in many cases. These should be set to deliver powerful rewards on success, but that success needs to be defined to set high expectations of growth and value creation. 

In fast growth PE companies, paying NEDs in shares and allowing them into incentive plans is normal. To compete, AIM companies need the same flexibility. 

For all top talent, AIM companies should think first about the gain share reward model used in PE, not set a policy of not paying more than is necessary so commonly seen for many companies. 

Executive Remuneration and Policy Design

Please feel free to email or call:

Damian Carnell - [email protected] +44 (0) 7989 337118

VA Bec Bostock - [email protected]

Please share this CORPGRO information with your board or your colleagues.