27 July 2016
The Investment Association's Executive Remuneration Working Group published its final report on executive pay on 26 July 2016, following consultation with a wide range of stakeholders over the last few months.
Whilst the report does not contain many surprises, it will be of interest to UK listed companies and investors. The Working Group has made a series of recommendations which many investors, particularly institutional investors, will very likely take into account in the run up to the 2017 AGM season. If the Investment Association goes further and incorporates any of the recommendations into its remuneration principles, those recommendations will have even more force amongst the investor community.
Overall, the message for companies and remuneration committees is there will be an expectation that commtitees should look again at current pay structure, decide whether it remains appropriate and be prepared to justify not only any change to it but even maintaining the status quo if that is felt right. In addition, the report calls for greater remuneration committee accountability, better investor engagement and more transparency in setting performance targets and when using discretion.