Nearly 25% of the UK’s largest organisations will freeze executive salaries this year because shareholders will not tolerate high payouts, according to a new report from PwC.
The PwC survey shows that pay rises for executives have halved on average in the last three years. Many companies will be holding their AGMs shortly and it is expected that whilst most executives will receive a 3% average pay increase, 23% will find their pay frozen.
30% of FTSE 350 firms intend to increase senior executives’ maximum potential bonus and half of them expect to introduce a compulsory element into a deferred bonus scheme.
In 2010, the average maximum potential bonus for CEOs of FTSE 100 companies rose to 175% of base salary with the average actual bonus at 111%.
Over the last few years, shareholder activism on pay has increased, pointed out PwC’s reward partner, Sean O’Hare. A lot of companies have been scrutinising their bonus structure but PwC expects shareholders to be dissatisfied that bonus restraint was short-lived.
Finance and accounting staff are also likely to see small salary increases but their bonus payments are likely to increase, according to the latest Career Benchmarking Survey from ICAEW/Robert Half. The report states that the average bonus for an ACA last year was £16,000, and only 9% of the survey’s respondents said they earned in excess of £100,000 in bonuses.
However, 42% of chief financial officers in the financial services sector intend to pay larger bonuses this year and another 56% intend to maintain the current level.
43% of those planning to increase bonuses expect to do so by between 5% and 6% and 29% are planning to pay an additional 7% to 10%.
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