Bonus payments for the heads of the FTSE350 companies have dropped for the second year in a row, according to PwC's annual executive pay survey of large UK companies.

The firm's research reveals widespread restraint at this year's AGM season, with total pay (made up of salary, bonus, long-term incentives and pension) largely static across FTSE350 senior management positions. Where salaries have gone up, the increase has been roughly in line with inflation at an average of 3%, which is consistent with 2012 levels.

PwC's analysis shows that around one in five of FTSE100 and 15% of FTSE250 chief executives have seen pay freezes in 2013, while one in ten received no bonus at all in 2013.

For those FTSE 100 chief executives who did see a bonus, the average payout was £905,000, a 7% decline on the 2012 average of £975,000. PwC calculates this represents just over two thirds of maximum payout, down from the high in 2011, where bonus payouts were typically over three quarters of the maximum.

Tom Gosling, head of PwC's reward practice, said: 'Companies have heard loud and clear from shareholders that bonuses and pay rises that are not closely linked to performance are unacceptable. The fact executives are receiving a lower proportion of their maximum bonus entitlement confirms remuneration committees are getting tougher in setting and measuring bonus targets.'

The survey shows that senior management and executives below board level in the FTSE 100 have seen the largest drop in annual bonus payments, with bonuses as a percentage of maximum payout falling from 70% in 2012 to 62% in 2013. In contrast, bonus payments for the same roles in FTSE250 companies have remained largely flat.

PwC data indicates that FTSE350 companies are planning minimal changes to pay levels next year, with most budgeting pay rises of between 2.5% and 3.5% for all management levels.

Gosling said: 'Restraint is the name of the game, with relatively few changes to pay plans this year. Where there has been change, it has been managed carefully through increased engagement with shareholders and more intensive work in the run up to the AGMs. This pattern of active engagement and consultation with shareholders is only set to continue as the new BIS reporting guidelines come into force this year.'

However, Gosling cautioned that the outlook for executive pay over the short term is unclear, pointing out that if the economic upswing leads to improvements in company performance, then remuneration committees will face a conundrum.

'Improved performance should lead to higher bonus pay-outs, but remuneration committees will be keen to continue showing restraint in what remains a controversial area. The key will be for companies to demonstrate a very robust link between pay and performance,' Gosling said.