Investment Association publishes updated Principles of Remuneration

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24 Nov, 2021

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.  The areas are:

  • Levels of remuneration - The Principles have been updated to emphasise that Remuneration Committees should provide a clear rationale for an increase to any element of, or to the overall level, of remuneration.
  • Value Creation Plans (VCPs) - the Principles have been updated to include a specific section on investor expectations on VCPs.
  • Grant size - The Principles have been updated to reflect investor preference for companies to reduce awards at grant where share prices have fallen rather than relying on discretion when awards vest

Additionally the IA has issued a letter to Remuneration Committee chairs highlighting key aspects of the Principles that its members have identified as areas of focus for the forthcoming AGM season. These are:

  • COVID and the stakeholder experience.
  • ESG metrics in Executive Remuneration.
  • Approach to pensions in 2022 and alignment of pension contributions of Executive directors with those of the company's wprkforce.

The press release, revised Principles of Remuneration and letter to the chairs of Remuneration Committees are available from the IA website.

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