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FTSE 100 firms cut bonuses following investor revolts

  • by JOHN-PAUL FORD ROJAS
 

Bonuses for bosses of blue-chip companies have fallen by 7 per cent after last year’s “shareholder spring” – when investors voiced their disquiet over soaring levels of executive pay.

The chief executives of FTSE 100 firms still received average pay-outs of £905,000 this year, but that compares to £975,000 in 2012, research by accountant PwC has found.

It means that heads of top-flight companies received on average two-thirds of the maximum bonus they might have been entitled to, compared to a high of three-quarters in 2011.

The fall comes after shareholder revolts in the City, notably at insurer Aviva and publisher Trinity Mirror, which saw the chief executives of both companies depart last year.

Tom Gosling, head of PwC’s reward practice, said it was unsurprising following the “bruising” year that firms were now keen to avoid the spotlight over executive pay. “Companies have heard loud and clear from shareholders that bonuses and pay rises that are not closely linked to performance are unacceptable,” he said.

“The fact executives are receiving a lower proportion of their maximum bonus confirms remuneration committees are getting tougher in setting and measuring bonus targets.”

The survey also showed executive bonuses across both FTSE 100 and FTSE 250 fell for a second year in a row, with one in ten receiving no bonus at all.

Total pay – including salary, bonus, long-term incentive and pension – has been largely static across senior management positions at the 350 businesses.

Where increases have been given, they have been roughly in line with inflation, at 3 per cent. One in five FTSE 100 chief executives and 15 per cent of those in FTSE 250 companies have seen pay freezes this year.

COMMENT, PAGE 37

 

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