Deloitte’s report suggests that the average salary increase for 2012 remained the same as last year (3%), while 46% of companies gave increases of less than 5%.
Commenting on the findings, Mitul Shah, Partner in the Remunertion Team at Deloitte, said:
“Directors’ remuneration is generally debated in response to the potentially high levels of remuneration in the UK’s largest companies. We should remember that this only applies to a relatively small number of companies.
“The research shows that remuneration in the mid 250 companies is lower. Structures tend to be less complex and practices are more diverse than in larger companies.”
The report also suggested that bonus payouts were lower than last year, revealing that the average payout was 75% of the maximum that may be paid, compared with 86% last year.
Shah commented:
“While bonus payouts are lower this year, more work could be done to ensure that any payout from annual plans is better linked with performance.
“Deloitte believed that any payout in excess of half the maximum should be the result of better than ‘good’ performance.”
Another finding from the report is that 57% of finance and property companies have given no salary increase in 2012. This is compared with 24% of industrial and manufacturing companies and 19% of retail and service companies.
For 2012, the average increase in finance and property companies is zero, compared with 3.5% in industrial and manufacturing companies and 2.5% in retail and service companies.
Commenting on these figures, Shah said:
“This suggests that the significant challenges faced in the finance and property sector recently have been reflected in the debates held by remuneration committees’ when considering if salary levels should be increased.
“While increases reflect the circumstances of the companies, and there will clearly be specific situations where increases are appropriate, we believe that all remuneration committees, in whatever situation, should consider whether there is a compelling reason to increase salaries for executive directors at all.”
