More than a quarter of Britain's largest companies are failing to explain to investors the criteria on the basis of which bonuses are paid to their top executives, a recent report by Pricewaterhouse Coopers (PwC) indicates. Two years ago it became a requirement for large public companies to explain performance pay.

However, as many as 28% of Britain's largest public companies are not providing the explanation, according to PwC that advises many FTSE 100 firms on executive pay. The non-disclosing companies have backed their actions by stating that fuller explanations risked giving away commercially sensitive information.

Sarah Wilson of Manifest, a company which advises shareholders on boardroom pay and other issues, opined that commercial sensitivity as an excuse does not wash, because it is the previous year's numbers one would be reporting on. "There are still remuneration committees that offer only limited disclosure [of bonus criteria] and that exercise discretion over bonuses – that's a toxic combination," Wilson added.

Fiona Camenzuli, a PwC partner, said the previous two years' data indicated that businesses which disclosed completely were also the best at linking bonuses to profit growth. "Distrust in executive pay is driven by the belief in some quarters that bonuses don't reflect performance."

Bonuses payable to employees have become more strongly linked to performance ever since the requirement for fuller discloser came into force. "The link between pay and performance is twice as high in the FTSE 100 companies that provide full target disclosure than in those that don't," Camenzuli said.

PwC Findings

- Only 36% of FTSE 100 firms fully disclosed to their shareholders the performance benchmarks used to determine bonuses payable in 2014.

- About 24% disclosed only a single "on-target" performance indicator for bonuses.

- 12% of these companies provided a description of the criteria for performance pay without giving numbers.

- The remaining 28% provided little or no disclosures at all.

Camenzuli said going forward it might become inevitable for all companies to make complete disclosures with regards to bonus payouts under pressure from investors.