Almost half of chief executives in the UK's largest 100 corporates have agreed to freeze their salaries this year after almost a decade of unprecedented increases.
An annual survey by law firm Addleshaw Goddard into FTSE350 executive pay and remuneration has found that 43.5% of CEOs have agreed to the freeze for 2009/10.
The research also showed that 69% of FTSE100 and 49% of FTSE250 companies now operate a deferred annual bonus plan.
Addleshaw Goddard said it is predicting a major overhaul of the UK executive pay model in response to shareholder pressure during the recent economic downturn which would see future reward and remuneration more closely linked with longer-term performance targets.
Key findings from the survey were:
- 43.5% of chief executives in FTSE100 and 49.2% of CEOs in a FTSE250 have taken a pay freeze for 2009/10.
Michael Carter, head of the employee incentives group at Addleshaw Goddard, said: "Investors have been keen to see the brakes being put on senior level remuneration over the last 12 months. A number of companies have looked to change their performance targets for both annual bonuses and long-term incentives to take into account the unsettled economic conditions, and shareholders will continue to focus on these to ensure that the pay-outs are commensurate with value delivered."
"With increasing public scrutiny and reputational risk, the pressure on remuneration committees to manage their reward programmes has become more intense over the last 12 months with the spotlight turning on the composition and operation of the committee. This is partly as a consequence of the pressure institutional shareholders are under from both their clients and politically to be seen to be taking an active role challenging boards around their remuneration policies."