FTSE350 companies have been given notice by shareholders that a trend to cut variable pay awards for executives should continue into 2018.

The warning came from the Investment Association in a letter to remuneration committee chairs highlighting the use of long-term incentive plans and bonuses.

The association, whose UK members have £7trn under management globally, also said it now expects companies to reveal the ratios between CEO and median, or average, employee pay levels.

Greater transparency on financial and non-financial bonus targets was also called for in the letter.

Andrew Ninian, director of stewardship and corporate governance at the Investment Association, said: “This year’s AGM seasons saw investors flex their muscles and hold big business to account.

“A majority of FTSE350 companies sought shareholder approval for their new pay policies and many of the UK’s top-20 companies have started to address investors’ concerns on executive pay levels.

“We now expect this trend to be extended across the wider FTSE, with more companies showing restraint on bonuses, long-term incentives and overall executive pay levels.”

The Investment Association’s principles for remuneration also have two new demands:

• relocation benefits should be for a limited period and disclosed at the time of appointment; and
• annual bonus targets should be disclosed within 12 months of payment with a proportion of bonus deferred if overall it is greater than 100% of salary.