Fewer FTSE 250 executives took a pay rise this year but bonuses are still 120 per cent of salary according to Deloitte report
FTSE 250 “are once again demonstrating restraint” in their salary awards, in response to investor pressure.
This year 38 per cent of chief executives and 29 per cent of executive directors received no pay rise, up from last year when 30 per cent and 27 per cent respectively had no salary increase, according to a Deloittereport, out today.
Bonuses are up this year however, with the median payout pegged at 69 per cent of the maximum on offer, equivalent to 120 per cent of salary.
The median salary increase for all executive directors was down slightly to 2.3 per cent from 2014, when executive salaries rose 2.5 per cent.
Deloitte said the fact that 85 per cent of companies received more than 90 per cent of shareholder votes supporting the remuneration awarded, and reduction in pay rises, meant businesses were listening to investor pressure to align rewards with performance.
Senior corporate governance advisor at the Institute of Directors Oliver Parry, told Morning Wire: “These figures seem to show large companies are listening to the concerns of shareholders and the wider public about executive pay, with average salaries rising no quicker than that for all other employees.
Mitul Shah, remuneration partner at Deloitte, added:
Investor pressure and regulation have led to some significant changes in executive pay. Companies have sought to respond to shareholder concerns with measures providing a stronger alignment of directors’ interests with the long-term performance of the company. This along with improved engagement and dialogue between companies and their shareholders has resulted in the increased level of support.
Companies have also moved to introduce longer-term holding periods for deferred share awards: 60 per cent of companies require part of any bonus earned to be deferred for a period of time, most commonly three years. In just over one in five companies no shares will be released for five years from the date of award.
And 85 per cent of companies have now introduced clawback provisions for bonuses incentive pay.
Parry added:
The public must be shown that executive remuneration is transparent, and clearly linked to performance, if the business community is to regain the trust lost during the financial crisis. These numbers are a small step along the way to rebuilding faith in business.
However, Stefan Stern, director of the High Pay Centre, told Morning Wire it was too early “to start patting companies on the back. We should wait until we see this is persistent behaviour,” adding bonuses at 69 per cent of the maximum was still very high indeed.