More than 70 per cent of FTSE 350 companies implemented a pay freeze for executive directors in 2009, according to a new report by Deloitte.

The average increase, including those receiving zero, is likely to be around 1.5 per cent to two per cent and where increases are being given, the median increase is around three per cent to four per cent, significantly lower than the six per cent to seven per cent seen in the past few years.

Campbell Oswald, global employer services partner at Deloitte in Birmingham, said: "Remuneration committees are responding both to the economic situation and to pressure from investors, the media and the general public. The majority have clearly concluded that to award salary increases to executives in this difficult climate would be inappropriate".

"This is the first time in a good many years that we have seen executive salaries frozen and, even more unusually, we have seen instances of some taking a salary cut."

Deloitte's analysis shows that although salaries may not be increasing, annual bonuses have not yet been hit to the same degree. While the potential bonus that may be earned has not typically increased this year, in most cases it has not decreased either.

Bonus plans also continue to pay out at a high level. Even when looking only at the most recent reporting periods, the typical payout is around two thirds of the potential amount.

"One might have expected bonus payouts to be significantly lower this year," said Mr Oswald.

"But it is important to remember that for many companies, performance during much of 2008 was still strong.

"We also should bear in mind that not all companies have been impacted to the same degree. In the financial and property sectors, which were hit earliest and hardest, the bonus payments are significantly lower, at around 30 per cent of the maximum.

 "We are aware of situations where directors have waived the bonuses due to them. We also have seen remuneration committees using discretion to reduce the level of award because the overall performance of the company did not merit the payout generated by the bonus formula.

"These actions are not something we have been used to seeing, and do suggest that some companies are endeavouring to enforce the link between pay and performance."

Deloitte's analysis shows that around one in four companies with financial periods ending on or after December 2008 are planning to change the performance measures on which the annual bonus is based for the coming year.

Almost a quarter of FTSE 100 companies have either introduced an element of deferral to the annual bonus plan, or increased the proportion deferred and held in shares.

Mr Oswald said: "We have seen calls for more deferral of bonuses in the financial services industry in response to the concern that short term bonuses have led to excessive and inappropriate risk taking. This message is clearly getting through, and across a much wider spectrum than just financial services.

"We are also seeing a number of companies including clawback provisions, although we anticipate that many of these provisions would only be brought into force in exceptional circumstances.

"While many of the criticisms of excessive bonuses and inappropriate risk taking are very specific to the banking industry, we expect some of these issues to reverberate across all industries.

"Ensuring that the remuneration of executives is strongly linked to the business strategy and the long term health of the company, and that incentive plans for executives do not encourage excessive risk taking, is clearly in the interests of all companies."