According to a new PwC survey of large UK companies, the cutbacks will result in the second successive year of bonus reductions in the FTSE100.
It reveals that fewer than 10% of those companies are expecting material increases to bonus pay-outs as remuneration committees plan to exercise restraint at upcoming AGMs. Nearly half (48%) of respondents expect bonus pay-outs will be about the same as last year, 21% think they will be at least 10% lower and 17% predict they will fall by more than a quarter.
The report went on to note that pay will also be largely static for FTSE100 executives. Over a third (38%) of respondents said they were planning to freeze salaries for executive directors in 2013 – a figure not seen since the height of the financial crisis in 2009. Salary increases, where given, are expected to be in the 3-4% range. Only 10% are planning increases of more than 4%.
Tom Gosling, head of PwC’s reward practice, said: “The calls from shareholders for pay and bonus restraint appear to have hit home. Following a number of years in which bonuses had crept up to around 80% of maximum pay on average; we expect them to fall back towards target levels of around 60% of pay this year. This will mark the second successive year of bonus reductions in the FTSE100.
“In all of the debate around executive pay, perhaps most worrying is the impact on the image of the UK as a place to do business. Nearly two thirds of companies said the scrutiny on executive pay is making the UK an unattractive location for executives. The UK benefits hugely from the flow of talent to our shores, bringing with it investment, jobs and tax revenues and care must be taken not to damage our competitive position.”
