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Bonuses plummet for company directors


Company executives have seen their bonuses shrink by 23% over the past year, by almost £15,000, according to research by the Chartered Management Institute (CMI).

The National Management Salary Survey, carried out with XpertHR, is compiled from the salary data of over 68,000 executives across 279 UK organisations. 

It suggests that the average bonus award for directors is now £49,767, down from £64,594 the previous year. This is a drop of £14,827. The average bonus figure for the past ten years is £68,043. 

The proportion of directors who receive bonuses has also fallen dramatically. It is now 53%, down from a high of 85% in 2006/7. 

The average bonus award for directors is 18 weeks, or 34.5%, of their annual salary. This is significantly higher than the average bonus award for managers, which stands at 14.5%, or 7.5 weeks' salary. 

CMI head of external affairs Patrick Woodman told HR magazine the results suggest companies are looking to tie reward closer to performance. 

"It's possible this is a reaction to some pretty serious public criticism," he said. "Employers want to be seen to be putting an end to the runaway reward packages we've seen in recent times."

Woodman added that this could be the start of a culture of reduced bonuses in the future. 

"Reward structures have often incentivised the wrong behaviours in the past," he said. "Employers may be looking at new ways to motivate their top performers."

CMI chief executive Ann Francke echoed these sentiments, saying the "astronomical" bonuses reported in the media are the "preserve of the lucky few".

"Many employees will hope that this marks the start of a new approach to bonuses and a move to share the benefits of growth more widely as the economy picks up," she said.