By Daniel Hunter

Executive pay levels are falling in real terms, according to figures from accountancy firm Pricewaterhousecoopers (PwC).

The study shows that 45% of FTSE 100 executives haven't received a salary increase this year and the median total pay figure received by CEOs rose by just 0.7%.

This is based on first 39 FTSE 100 remuneration reports of companies with year ends from 30 September 2014 to 31 December 2014 that have reported up to 25th March 2015.

The report reveals that the median salary increase for CEOs is around 2%, with around 45% of companies freezing salaries at current levels, up from 25% in 2014. In a fifth of these cases, CEOs have chosen to waive their salary increase.

At the same time, most companies have introduced best practice remuneration structures in response to shareholder demands. 98% of companies have introduced measures to reduce or recover bonuses and long term incentive plans (LTIPs) in certain circumstances, known as malus and clawback. And 60% of companies now operate a holding period on their long-term incentive plan, requiring executives to hold shares after they have vested.

Tom Gosling, head of PwC’s reward practice, said: “Early 2015 data shows that the pattern of recent years has become a trend. Executive pay is no longer increasing and indeed is falling slightly in real terms.

“At the same time, pay is getting harder to earn, with almost all companies introducing the ability to claw back bonuses and many lengthening the time executives have to hold onto the shares they get from long-term incentives. Remuneration committees are really raising the bar for executive pay.”

Bonus payments to CEOs have increased slightly for the first time after three years of decline, increasing by 3%. However, performance conditions on long-term incentive plans were harder to achieve with pay-outs falling to less than half (47%) of the maximum award available, offsetting improving share price performance. As a result the total pay for CEOs including salary, benefits, and all incentive plan pay-outs increased by just 0.7% with a median total pay figure of £3.5m.

Maximum incentive award levels proposed for 2015 are comparable to 2014, with 90% of companies leaving incentive opportunities unchanged. The median maximum pay opportunity for CEOs if all performance targets are met is the same as last year. Only 20% of companies are bringing back the remuneration policy for a new binding vote.

Two-thirds of the companies surveyed now disclose financial bonus targets used for the year just ended, and nearly half give full details of threshold, target and maximum performance levels required to earn bonuses.

Tom Gosling, head of PwC’s reward practice, said: “There’s little sign of executive pay inflation picking up again. Remuneration committees are setting 2015 pay and bonus opportunities at much the same level as last year and 80% of companies are leaving their remuneration policies unchanged. There’s no doubt the new voting rules introduced last year have given shareholders more power and helped to bring greater stability to executive pay.

“Companies are improving disclosure of bonus payments and targets in response to investor demands. We expect this trend to continue over the coming years. Investors are now being given a very full picture of the link between pay and performance.

“Over the last few years investor pressure and regulation have led to a significant raising of the bar in executive pay. On the whole the right balance has been struck. Companies can still pay enough to attract talent, but the highest levels of pay are getting tougher to earn, with an improved link between pay and performance. But what’s needed now is a period of stability for the new rules to bed in. Investors and remuneration committees are largely doing their job. They should be left to get on with it.

“Our research suggests that investors and non-executive directors consider the new regime to be working. Where they’ve needed to, investors have used the threat of voting against the remuneration policy to push back on pay plans they consider unacceptable.”