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FTSE 100 bonuses fall for third consecutive year

New BIS pay disclosure rules sees bonuses reduced and pay frozen for FTSE 100 executives

BONUSES at the top companies in the UK have reduced for the third consecutive year, according to PwC research.

The analysis shows that 2014 is set to be another year of executive pay restraint as early reporting indicates FTSE 100 executives have seen their bonuses fall for the third consecutive year and nearly a quarter have had their base pay frozen.

CEO’s bonus pay-outs for 2013 were on average £1.14m which was 1% lower than 2012 in companies with a year end of 30 September 2013.

Salaries for executives were also frozen and if an increase was given, it was in-line with the rest of the company’s workforce e.g. 3% for all staff.

A third of companies believe remuneration committees are more focused on fairness between executives and the wider workforce due to new Department for Business Innovation and Skills pay disclosure rules. However, 60% believe these new rules will make it harder to recruit executives from abroad.

It was also revealed that due to market trends the pressure is on to link pay more closely to performance, according to a supplementary survey of large UK companies by PwC.

Tom Gosling, head of PwC’s reward practice, said: “Even when long-term incentives are included, total pay has only risen by 0.5% year on year, despite the recovering stock market which tends to increase the value of share awards.

“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.

“It seems less and less likely that executive pay inflation will return to the levels seen before the financial crisis. Most organisations expect pay to plateau over the next five years as shareholder pressure and a focus on pay for performance remains high priority.”

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