(EDINBURGH) UK real estate chief executives earned their smallest pay increases in five years and their annual bonuses fell along with property values and share prices, according to a report published yesterday.
Chief executives of publicly traded real estate companies received an average raise of 5 per cent in the year through April to a median salary of £405,000 (S$966,000), consultants PricewaterhouseCoopers (PwC) LLP said..
Real estate values plunged 44 per cent since peaking in June 2007 as banks made financing harder and costlier to obtain and the recession cut demand for offices and shops. The FTSE 350 Real Estate Index tumbled 72 per cent since reaching a record at the end of 2006.
'We think there will be a radical rethink of the remuneration of executives,' PwC analysts said in the report. The existing pay structure 'is no longer sustainable in the current economic climate nor does it fit with the general outlook for the UK property market', they said.
Pay freezes and raises matching inflation will become 'increasingly prevalent', according to the report.
Land Securities Group Plc, the largest UK real estate company, said last month that chief executive officer Francis Salway and other executive directors received no performance bonus for last year and won't get salary increases for the fiscal year that started April 1.
The median bonus chief executives collected last year sank to 67 per cent of their salary from 100 per cent in the two previous years, the PwC report said. This year the median bonus is likely to fall to 43 per cent, the firm said.
The typical salary of chief executives and chief financial officers of real estate companies was close to that of similar executives in the FTSE All-Share Index, PricewaterhouseCoopers said.
Chief executives in the All-Share Index earned a median salary of £411,000. Finance chiefs at property companies earned a median £300,000, compared with £275,000 for those in the full index, according to the report. -- Bloomberg
Source: Business Times, 16 June 2009
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