September 24, 2013 12:02 am

Fall in bonus payments to FTSE 100 executive directors

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Bonus payouts to FTSE 100 executive directors have fallen and boards are making greater efforts to link pay to performance in response to shareholder pressure, a report has found.

The median salary increase this year has been 2.5 per cent, the same as last year, and a third of directors received no increase, said Deloitte, the advisory firm.

Annual bonuses in respect of 2012 performance fell to 67 per cent of maximum bonus opportunity, compared with 75 per cent for 2011 and 87 per cent in 2010. The median remained at 150 per cent of salary.

Deloitte said companies were considering performance periods of more than three years in their incentive plans, or requiring shares to be held for longer periods. More than a quarter had incorporated longer timescales in their plans.

“We are starting to see a genuine move towards a stronger alignment between remuneration, company strategy and performance,” said Stephen Cahill, partner in the remuneration team.

Fidelity Worldwide Investment, one of the world’s biggest fund managers, this week warned 400 companies it invests in to reform pay policy or face votes against remuneration at annual meetings.

Shareholder votes will be binding on companies from October, requiring them to change policy if more than half of their investors reject remuneration reports.

Deloitte said 62 per cent of companies now required executive directors to hold shares with a value of more than one times their salary compared with 48 per cent last year.

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