Executive bonuses come under pressure

MEDIAN SALARY increases for executive directors in FTSE 250 companies have remained at 3%, the same level as last year, according to Deloitte

Deloitte’s annual survey of directors’ salaries found that about 30% of companies gave no increase, in line with 2011, while a further 46% of companies gave increases of less than 5%.

Bonus payouts were also lower than last year. The median payout in 2011 was 75% of the maximum that may be paid, compared with 86% last year.

The median long-term opportunity in FTSE 250 companies is 125% of salary at award, unchanged since last year. This is significantly higher in finance and property companies where the median value at award is 165% of salary.

Mitul Shah, partner in the remuneration team at Deloitte, said there are “some positive trends emerging”.

“We have seen significantly smaller payouts from long-term plans in the last two years than previous years. Our research suggests that the link between pay and performance in FTSE 250 companies is improving,” Shah said.

“While bonus payouts are lower this year, more work could be done to ensure that any payout from annual plans is better linked with performance.”

More than half of finance and property companies have given no salary increase in 2012 compared with 24% of industrial and manufacturing companies and 19% of retail and service companies, the research found.

For 2012, the median increase in finance and property companies is zero, compared with 3.5% in industrial and manufacturing companies and 2.5% in retail and service companies.

“This suggests that the significant challenges faced in the finance and property sector recently have been reflected in the debates held by remuneration committees’ when considering if salary levels should be increased,” Shah said.

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