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UK ‘Shareholder Spring’ takes its toll on top pay

The "Shareholder Spring" continues to weigh on U.K. companies, with CEO bonuses falling for a third consecutive year in 2013, according to a PwC report published on Tuesday, as investors keep a watchful eye on corporate excess.

PwC's analysis of FTSE 100 companies found that the average CEO bonus came in at £1.14 million ($1.90 million) last year, down 1 percent on 2012.

On top of this, nearly a quarter of executives didn't get any increase in their basic salaries, with median salary standing at £898,000. Where raises were given they were in general less than 3 percent – largely in line with inflation and the pay increases for the general workforce.

"Even when long-term incentives are included, total pay has only risen by 0.5 percent year-on-year, despite the recovering stock market, which tends to increase the value of share awards," said Tom Gosling, head of the consultancy's reward practice, in the report.

The decline in bonuses and pay stagnation came despite the economic recovery seen in 2013 – the U.K. economy grew by around 1.7 percent during the year – and the 10 percent gain to the FTSE 100 index.

PwC attributed the remuneration restraint to the 2012 wave of shareholder rebellions, whereby investors refused to back multimillion bonuses for executives when coupled with anemic corporate performance.

FTSE 100 companies that faced revolts included insurer Aviva, pharmaceutical giant AstraZeneca and Barclays bank.

"The extent of executive director salary freezes since the financial crisis is one of the untold stories of executive pay restraint… The desire to demonstrate fairness within the workforce on pay decisions is now much higher up remuneration committees' agendas," said Gosling.

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However, Peter Hahn, a senior lecturer at Cass Business School in London, said remuneration might simply reflect the types of industries featuring in the FTSE 100. He noted that the index was heavily dominated by basic resources companies, like Anglo American and Rio Tinto, which had struggled in recent years, as well as by consumer producers such as Tesco and Unilever, which had faced some changing consumer habits.

"I would certainly say that remuneration committees have upped their game… but I think in the U.K., it is also a reflection of the types of industries we have and the general business environment in Europe," he said.

He added that misinformation about executive pay also made it difficult to make accurate year-on-year comparisons in the manner of the PwC report.

"It is not easy to look at broad comparisons," Hahn said. "One of the things that comes in to play is how options are valued on the day of granting – which may or may not have a future value."

Nonetheless, Gosling forecast that executive pay would remain subdued over the next 10 years.

"It seems less-and-less likely that executive pay inflation will return to the levels seen before the financial crisis. Most organizations expect pay to plateau over the next five years, as shareholder pressure and a focus on pay-for-performance remains high priority. There's a good case to be made that executive pay will stagnate, or even reduce in real terms over the next decade."

—By CNBC's Katy Barnato. Follow her on Twitter: @KatyBarnato