Dated: 1 November 2010

The results of the Institute of Directors (IoD) annual Directors Rewards survey, carried out by Croner Reward, part of Wolters Kluwer UK, are published today.

The survey results are based on evidence drawn from large unlisted companies and SMEs (small and medium-sized companies). The survey analyses the pay and bonuses of over 1,500 directors.

Key findings:

• The majority of directors across the private sector received a pay cut in real terms in 2010. This picture contrasts with the recent Incomes Data Services survey which showed that some top company directors in the FTSE 100 have received a large remuneration increase rise this year.

• 46 per cent of directors have had either a pay freeze or pay reduction in cash terms in 2010.

• The average pay rise for the 54 per cent who received one in 2010 was 2.5 per cent (i.e. a real terms cut once inflation is take into account).

• The average basic pay of a managing director in a small company (turnover up to £5m a year) was £70,000; in a medium sized company (turnover up to £50m a year) it was £100,000; and in a large company with a turnover up to £500m a year it was £128,000.

• Pay reductions for directors are not being offset by better bonuses, which remain small relative to the big private sector bonuses that are regularly reported in the media.

• 23 per cent of directors reported that their bonus was cancelled or postponed this year. Where bonuses were awarded to directors, the average bonus was down on last year by nearly 20%. The average bonus for a director in a small company was £10,000; it was £12,600 in a medium company; and £17,200 in a large company.

Commenting on the survey results, Miles Templeman, Director-General of the Institute of Directors, said:

“This survey kills the idea that company directors are beginning to enjoy big pay rises at the very moment a pay freeze takes effect in the public sector. For the second consecutive year, most directors are seeing their basic pay and bonuses go down. Clearly the impact of the recession on director remuneration is still being felt.

He added:

“When politicians and other individuals attack the private sector for excessive pay they ignore the fact that the majority of private sector directors earn about the same as a school head teacher or an ordinary NHS GP.”