Salary increases for executive directors and senior executives remained at 2003 levels, while bonus payments decreased last year, according to a survey by Mercer Human Resource Consulting.
The study covered reward arrangements for 47 top management positions in 38 large UK companies, including FTSE 100 companies and other large multinationals.
It found that executive reward packages are beginning to look very different to those of five years ago.
Richard Lamptey, European partner at Mercer, said 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.
“Media interest and growing scepticism among institutional investors have put executive pay under greater scrutiny,” said Lamptey.
“There is now more pressure to keep executive pay level increases in line with rises for other employees.”
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.
Bonuses for group chief executives ranged between 8% and 140% of salary while those for finance directors were between 7% and 132% of salary.
According to the survey, 25% of organisations deferred a proportion of their executives’ bonus payouts in 2004, up from 14% in 2002 and 19% in 2003.
The survey also found the majority of bonus plans use a combination of financial and non-financial measures.
Employers are now more likely to use deferred annual bonuses, co-investment plans and performance share plans as long-term incentives for their executive employees.