Pay increases for top executives in the FTSE 100 are ‘cooling off’ although a minority are still continuing to receive substantial rises, a report has found.

Research from Incomes Data Services among CEOs in the top share index found that median earnings growth, including bonuses, was 8.5 per cent in the past year. The growth in earnings is considerably less than it was in 2010-2011, when the equivalent figure was 43.5 per cent.

A fall of 2 per cent in performance-related bonuses was one of the factors behind the trend. Last year, bonuses surged upwards as businesses staged a recovery from the previous year’s slump, but this growth has not been repeated as harder times returned in 2011-2. Shareholder pressure is also a factor, analysts believe.

"Remuneration committee members have now realised that their decisions will be scrutinised very closely by shareholders and the media,” said Steve Tatton, editor of IDS Pay Report.

"Shareholders are demanding to know what they are paying for. No longer, it appears, do remuneration committees and directors have a free hand, in the words of some, 'to pay themselves what they wish'.
"While the 'shareholder spring' has attracted a lot of attention recently, our analysis suggests that the pay packets for chief executives were already starting to reflect sentiment among shareholders and the wider public in the second half of 2011. There are definite signs of cooling off in executive pay awards."

However, leaders’ pay is still growing a considerably higher rate than the rest of their workforces, with the average pay rise across the economy being 1.6 per cent - lower than inflation – according to ONS figures released this week.