UK 'lab' publishes report on remuneration

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  • Financial Reporting Lab Image

05 Mar, 2013

The United Kingdom Financial Reporting Council (FRC) has published another project report from its Financial Reporting Lab. The report on 'Reporting of pay and performance’ focuses on the UK draft reporting regulations on remuneration.

The project was undertaken at the request of the Department of Business Innovation and Skills (BIS). It was designed to explore the views of investors and companies on two aspects of the draft reporting regulations on remuneration:

  • scenario charts demonstrating how directors’ pay varies with performance, and
  • a chart comparing CEO pay based on the single figure for remuneration, with company performance, measured using Total Shareholder Return (TSR).

The report shows that participants in the project favoured a simplified version of the scenario charts proposed by BIS. They also concluded that, rather than replacing the current five year TSR chart, this should be retained and be supplemented with a simple table setting out historic levels of CEO pay together with information on the level of performance-related elements of pay. All participants agreed that there is a need to educate the market and market commentators on the new regulations.

Please click for the FRC press release and access to the report (all links to FRC website).

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