Senior manager salaries hit by recession

AROUND half of senior managers below board level have not been awarded a salary increase, according to research by Deloitte.

A study by the business advisory firm showed that although the salaries for senior managers are less likely to be frozen in 2009 than for executive directors the overall total cash for the group has decreased more than board directors.

In September, a report on the remuneration of executive directors indicated that around two thirds received no pay increase this year.

The latest report shows that while this trend continues below the board it is not so widespread.

Within the survey participants just over half the executive committee members and around 45% of the senior managers did not receive a salary increase in 2009.

Similarly, slightly more of those surveyed were expecting no salary increase for directors in 2010 compared with positions below the board.

Nearly 40% of companies expect no increase for directors, 38% expect no increase for executive committee members and 35% no increase for senior managers.

Around a quarter expect increases to be less than 3% and around 40% anticipate increases of between 3% and 5%.

Chris Powell, Deloitte partner and head of the Leeds audit practice, said: “It is perhaps not surprising that pay freezes have been more common at board level.

“Our findings demonstrate that the salary of an executive committee member is typically around 65%of the salary of an executive director while the salary for a senior manager is typically around 40% that of an executive director.

“The survey also shows that annual bonus opportunity and potential long term incentive awards, often defined as a percentage of salary, are also likely to be significantly lower. The bonus potential for an executive committee member is typically about 100% of salary and for other senior managers is typically around 75% to 80 per cent of salary. This contrasts with a more typical bonus potential of around 125% of salary for the executive directors in these companies.”

He said that for many companies the impact of the recession on long-term awards had not yet become apparent.

“The level of payout in bonus plans is influenced by the degree to which the sector in which the company operates has been affected by the current recession,” Mr Powell continued.

“But it is important to be confident that the bonus payouts at all levels reflect reality and companies need to focus on the measures and targets in place for the coming year to make sure these remain appropriate.”