Report calls for 'radical' re-think on executive pay
The current economic climate means the way senior executives in the leisure sector are paid will have to "radically re-thought", according to a newly-published report.
In 'The State of Pay', accountancy firm PricewaterhouseCoopers (PwC) said the 'reward profile' applied to executive remuneration in recent years was unsustainable in the current economic climate, "nor did it fit with the general outlook for the UK economy".
Key reward issues in the near future would focus around striking the right balance between the expectations of executives, the company and its particular strategy, and how a business's shareholders viewed their own requirements "in the light of the challenging market conditions".
It would also be important to see to it that performance conditions supported company strategy, "rather than follow market practice - this will be a positive development from the one-size-fits-all approach which has prevailed".
The firm's report found that the average annual salary for a leisure company chief executive and finance director in 2009 was £500,000 and £279,000 respectively, up from £290,000 and £164,000 in 2005.
PwC said individual year-on-year salary increases had dropped below 1.5 per cent for the first time in recent years, and the percentage of companies freezing executive pay has increased.
On the question of bonuses, PwC said there was "little correlation between bonus payments and actual short term performance".
Its report added that shareholders were concerned that executives could see windfalls when the share prices in some companies improved, as their long term share incentive plans kicked in.
PwC said it did not expect to see "any material increases in salaries" in the near future, with salary freezes occurring "in an increasing number of cases".
A number of leading pubco bosses have seen their overall remuneration packages fall in the past year.
Punch Taverns chief executive Giles Thorley was paid a basic salary of £525,000 in the 2007/08 financial year, the same as the year before, while his overall package fell more than 30 per cent to £569,000.
Meanwhile Enterprise Inns boss Ted Tuppen saw his basic salary rise six per cent to £610,000 in 2007/08, although with no performance bonus that year his overall package fell by a third to £634,000.
