On 31 October 2016, the Investment Association ("IA") wrote to chairmen of remuneration committees of FTSE 350 companies setting out significant changes in its principles of remuneration, mostly made in response to the Executive Remuneration Working Group's recommendations, published on 26 July 2016.
The IA's letter is available at:
The main changes include:
- increased flexibility for remuneration committees to adopt the structure most appropriate for the implementation of their business strategy;
- a requirement for companies to disclose pay ratios between the CEO and median employee, and the CEO and the Executive team, to provide context to remuneration;
- a requirement for executives to continue to hold shares for a time period after termination of employment;
- an obligation on companies to consult shareholders if more than 20% of votes cast are against a remuneration proposal, to understand the opposition and take measures to address concerns; and
- new guidance on restricted share awards. The updated principles of remuneration can be accessed here:
- http://www.theinvestmentassociation.org/assets/files/press/2016/Principles%20of%20Remuneration%202016.pdf
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