By Daniel Hunter

FTSE100 companies are taking a more restrained approach to executive pay and bonuses this year following shareholder calls that pay needs to be more closely linked to performance.

PwC analysis reveals that of the 40 FTSE100 companies that have published their remuneration reports so far this year, over a third (35%) have frozen the salary of their chief executive. Where salaries have increased, these have largely been in line with inflation at around 3%.

Companies are also taking a tougher line on bonuses. PwC analysis shows that FTSE100 companies are on average reducing bonuses by 8%, compared to last year. Although the research reveals a wide range of bonus outcomes, over a third (38%) of FTSE100 companies have cut executive bonuses by more than 10% compared to last year.

“Early indications from the reporting season show that companies are starting to change their approach to executive pay," Tom Gosling, head of PwC’s reward practice, said.

"Companies have heard loud and clear shareholders’ feedback that executive pay should be more closely linked with performance and are starting to act on this. Many are keen to demonstrate that they are taking a responsible approach to executive pay and that pay increases are not outstripping those of the wider workforce.

“Despite buoyant share prices, remuneration committees have responded to shareholder concerns with modest pay increases, if any, and tougher bonus assessments.”

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