Directors see take-home pay fall as bonuses are cut down

Tim Wallace
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BOSSES’ bonuses fell last year as shareholders took a stronger position on pay and shifted more remuneration towards longer-term incentives, according to a Deloitte report out today.

The median bonus payout for executive directors was 67 per cent of the maximum on offer to bosses, down sharply on the 75 per cent in 2011 and the 87 per cent in 2010.

Typically the maximum on offer is 150 per cent of salary.

Bonus payouts are even below the 75 per cent paid out at the height of the financial crisis in 2008-09.

The median salary increase came in at 2.5 per cent, well below the rate of inflation, while a third of companies did not increase pay.

The overall impact is that cash payouts fell to £1.67m in 2013 for the median FTSE100 CEO, down 5.8 per cent on the £1.77m in 2012 and £1.88m in 2011.

Total take-home remuneration is roughly flat on the year as shares vesting from long-term incentive plans are up in value thanks to the rising stock market over the last 12 months.

“It is clear that companies now understand there is no rationale in normal circumstances for giving salary increases to executives that are higher than those given to other employees,” said Deloitte’s Stephen Cahill.

“It also does not mean that there should be expectations of salary increases being awarded every year.”

The proportion of shares awarded four years ago actually translating into payouts is increasing as bosses meet more of their long-term targets.

The median boss received 68 per cent of the shares awarded in 2009, up on the 50 per cent of those awarded in 2008 and 45 per cent in 2007.