FTSE 100 executives have seen their bonuses fall for the third consecutive year and nearly a quarter have seen their base pay frozen, according to research by PricewaterhouseCoopers (PWC).
Its analysis of 43 FTSE 100 companies with year ends from 30 September 2013 onwards, found that the median bonus payout for chief executive officers (CEOs) was £1.14 million, with CEOs receiving bonuses 1% lower, on average, than in 2012.
Where increases were given, these were largely in line with inflation and increases for the general workforce, at less than 3%.
The median salary for CEOs in the FTSE 100 was £898,000.
PWC’s analysis also found that almost two-thirds (60%) of FTSE 100 companies expected the overall level of senior executive pay to be within 10% of current levels over the next five years.
It also found that the Department for Business, Innovation and Skills’ (BIS) new pay disclosure rules, which took effect from 1 October 2013, are impacting remuneration committee decision-making.
Around one-third of FTSE 100 companies believe their remuneration committee is more focused on the fairness between executives and the wider workforce when making pay decisions as a result of the rules.
However, 60% believe the disclosure rules will make it harder to recruit executives from overseas.
Tom Gosling (pictured), head of PWC’s reward practice, said: “The 2014 [annual general meeting] AGM season is shaping up to be another year of restraint.
“Despite fears that executive pay inflation would take off again as the economy recovers, this doesn’t seem to be the case. Executives are seeing only modest salary increases and bonuses continue to fall.
“Remuneration committees are clearly listening to shareholders, are exercising restraint in their decision-making and working hard to ensure pay only increases when performance improves.
“The extent of executive director salary freezes since the financial crisis is one of the untold stories of executive pay restraint. It is now common practice that executive pay rises are in line with the rest of the workforce.
“The desire to demonstrate fairness within the workforce on pay decisions is now much higher up remuneration committees’ agendas.
“The new pay disclosures are a double-edged sword for companies. While they have helped re-build trust in executive pay and increased fairness with the wider workforce, there are concerns that the prescriptive nature of the rules will make it harder for companies to recruit directors from overseas and have not led to improved quality of engagement with shareholders.”