British companies have successfully headed off big rows over pay for senior executives this year and avoided accusations of paying big rewards for failure by consulting with shareholders.

Boards have had few public upsets with investors compared with a few years ago, says New Bridge Street Consultants, which advises a fifth of FTSE 100 boards on executive pay structures and on Tuesday produces its second annual survey on pay.

Rob Burdett, a partner at New Bridge Street, said: “The AGM season has been less fraught this year than in previous years, with companies listening to shareholders.”

Fewer public outcries do not mean that investor scrutiny has lessened, he warned. If anything, it has intensified, with investors demanding more transparency and disclosure.

“Shareholders are also asking companies to revisit [schemes] and be more stringent on conditions put in place in the past to ensure they are still fit for purpose,” said Mr Burdett.

New Bridge Street found that the trend to link pay more closely to performance is continuing. Variable pay now makes up 55 per cent of packages.

Annual bonuses – both paid and the maximum available if executives achieve set targets – have accelerated, although, increasingly, they are paid in shares, and more companies insist on deferring payment for some years, says New Bridge Street.

It said basic salaries for top executives of FTSE 100 companies rose by between 5 and 6 per cent in 2006, to a median of £785,000 ($1.49bn). This compares with yearly rises of about 14 per cent five years ago. The median total expected pay, taking into account bonuses, options and long-term incentive plans vesting in the future, rose by 12 to 15 per cent to £2.4m. This compares with average earnings of inflation of 4.3 per cent. Last year, total remuneration packages for industry chiefs rose between 11 and 13 per cent.

However, more companies are putting detailed pay plans before shareholders before finalising or publicising them. Prudential, the insurance group at the centre of previous pay rows, consulted shareholders twice before finalising its pay structure this year.

Robert Talbut, chief investment officer of Royal London Mutual, says: “The perceived acquiescence shouldn’t mask the fact that there are growing rumblings of discontent about remuneration inflation . . . However, there is a lot more discussion and dialogue. The general level of debate on these issues and others is better than it has ever been. It is encouraging. But there are still rumblings.”

This Forum program is open, free of charge, to all shareholders of the invited corporate participants, and to any fiduciaries or professionals concerned with the investment decisions of those shareholders, according to the posted Conditions of Participation.  The Forum's purpose is to provide shareholders with access to information and a free exchange of views on issues relating to their investment interests described in the Forum Summary.  As stated in the Conditions, all Forum participants are expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

This Forum program has been organized with the support of Hermes Equity Ownership Services, Ltd.  It is the first in an expected series that will be managed by a not-for-profit “Institute” to be established for the purpose of continuing the Forum programs conducted by Gary Lutin.