More than half of FTSE 350 companies will not increase the salaries of executive directors in 2010, according to a report by business advisory firm Deloitte.

This will mean a two-year salary freeze for many executives, after over two-thirds were awarded no pay increase in 2009. Increases, where given, are likely to be around 3%, which is much lower than the level of increase seen in prior years.

Stephen Cahill, partner in the remuneration team at Deloitte, says: “Last year we saw a very large number of companies freezing executive salaries but at the time it was difficult to predict whether this was a one-off. Now it appears that the years of executive salaries increasing at rates far in excess of inflation and the increase in average earnings are, at least for the moment, well and truly over.”

Bonus payouts are higher than in 2009 in FTSE 100 companies and lower in FTSE 250 companies. One in seven FTSE 250 companies paid no bonus to executive directors for the 2008/09 period and the median bonus was around 60% of salary, almost 10% lower than the previous year.

In contrast, bonuses were paid in almost all FTSE 100 companies and payments have returned to more ‘normal’ levels, following a year in which they were generally slightly lower. The median bonus payment was around 100% of salary and in the top 30 companies was 140% of salary, almost 20% higher than last year.

“Our research suggests executive remuneration is undergoing a degree of change but as yet the jury is still out as to whether this will result in a complete transformation,” Cahill adds.