Investment Association publishes updated Principles of Remuneration

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10 Dec, 2020

The Investment Association (IA) has published its updated Principles of Remuneration ("the Principles").

This remuneration guidance sets out its members’ views on the role of shareholders and directors in relation to remuneration and the manner in which remuneration should be determined and structured.

The Principles have received a small number of updates to reflect developments in market practice and investor expectations including:

  • Use of Non-Financial Performance Measures – The Principles have been updated to be clearer on shareholder expectations on the range of non-financial performance metrics (strategic, personal and Environmental, Social and Governance) in variable remuneration.
  • Post-Employment Shareholding Policies – Shareholders are keen to understand the enforcement mechanisms which the Remuneration Committee has in place to ensure that post-employment shareholding policies are enforced once a director has left the Company.
  • Deferral of bonuses – the Principles have been updated to reflect member expectations that a proportion of the entire bonus should be deferred when the bonus opportunity is greater than 100% of salary.

The above changes have been set out in a letter issued to Remuneration Committee chairmen. The letter additionally explains that the approach to pensions should be a key area of focus in the forthcoming AGM season. The Principles are supplemented with separate guidance which sets out member expectations on specific issues arising as a result of the COVID-19 pandemic.

The revised Principles of Remuneration, letter to the chairs of Remuneration Committees and supplementary guidance are available from the IVIS website.

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