Salary increases for Britain's senior executives remained at 2003 levels last year while bonus payments decreased, a new report has revealed.
A survey by Mercer Human Resource Consulting looked at the reward arrangements for 47 top management positions in 38 large UK companies, including FTSE 100 companies and other large multinationals.
It found that median salary increases remained at six per cent of base pay - well above the rate of inflation – although there were large variations both between and within companies.
Median annual bonuses in the companies surveyed were 39% of salary in 2004 compared to 49% in 2003. The survey also found bonus payments varied significantly between companies, reflecting their performance. For example, bonuses for Group Chief Executives ranged between 8% and 140% of salary while those for Finance Directors were between 7% and 132% of salary.
"Media interest and growing scepticism among institutional investors have put executive pay under greater scrutiny," said said Richard Lamptey, European Partner at Mercer.
"There is now more pressure to keep executive pay level increases in line with rises for other employees."
It also emerged that a quarter of firms deferred a proportion of their executives’ bonus payouts in 2004, a practice that Richard Lamptey said would link additional pay to sustained future performance and help to retain top executives.
But contradicting the trend of recent years, the number of survey participants operating both share options and long-term incentive plans for executives dropped to 42% last year from 63% in 2003.
"Executive reward packages are beginning to look very different compared to five years ago," Richard Lamptey added.
"Increased disclosure, shareholder attention and the state of the stock market have changed the value of packages, the balance between fixed and variable elements and how pay is delivered."