Salaries for finance directors (FDs) of UK listed companies went up by an average 4.7% last year, with those working at AIM-listed companies seeing particular strong increases, according to research by Incomes Data Services (IDS).

IDS figures suggest the FDs of FTSE 100 companies now earn £1.7m a year on average, taking into account salary, bonuses, share option profits and incentive payments. Salaries by themselves average £502,000, a 3% rise compared with 2012.

The survey found that FDs with AIM-listed businesses saw the fastest growth in salaries, with an average increase of 5.9% in the last year. Their average salary is now £143,000, with total earnings rising to £174,000 when bonuses, share option profits and incentive payments are included.

IDS's research shows that while the salaries of FTSE 100 finance directors make up 13% of total earnings, in contrast their AIM-listed counterparts receive 49% of their earnings as salary.

Nasreen Rahman, author of the report, said: 'At FTSE 100 companies, remuneration committees tend to prefer a higher percentage of directors' earnings to be performance-based, so that it is aligned with shareholders' interests. This is not always appropriate for AIM-listed businesses, which can experience much more volatile revenue and share price performance.'

Overall, IDS says its research suggests that salary increases for FDs are being driven by the changing nature of the role, which is leading to a shortage of qualified, experienced candidates.

Rahman said: 'Finance directors now often have a lot more responsibility for commercial, strategic and regulatory issues, which was not always the case in the past. Listed companies are now finding that it can be difficult to find someone appropriate for their finance director positions, as there is a limited pool of candidates with the breadth of skills and experience now required for the role.'