The UK shareholder advisory group Pensions and Investment Research Consultants (PIRC) has released the 17th edition of its UK Shareowner Voting Guidelines.
In its press release, PIRC states that the 2013 Guidelines are characterised by a greater emphasis on the management of shareholders’ capital, and a tougher approach on remuneration issues. The most striking change on pay is their decision to oppose all new long-term incentive plans (LTIPs) on the grounds that they are fundamentally flawed.
PIRC goes on to say that this year’s Guidelines are also marked by a much greater focus on the financial aspects of UK corporate governance practice. There is a reorientation towards the core issue of companies’ management and protection of shareholder capital. This change builds on PIRC’s critical view of company financial and accounting disclosures under the IFRS framework.
PIRC says it will now recommend opposition to the adoption of a company’s report and accounts and audit committee members where it is clear that the company’s adherence to IFRS has led to a failure of the accounts to provide the true and fair view. Where it is deemed that adherence to IFRS has led to a failure of the accounts to provide the true and fair view PIRC will not support the election of the finance director responsible for the accounts in question.
PIRC will also encourage greater shareholder scrutiny of the role of remuneration consultants. In PIRC’s view the remuneration consulting industry is responsible for the majority of schemes operated by UK listed companies today, and has a vested interest in creating complex and accommodating outcomes. In addition PIRC is concerned by fact that firms offering remuneration consulting to boards often also have other commercial relationships.
As a result PIRC says it will no longer support the adoption of a company’s report and accounts, the re-election of the chair of the audit or remuneration committees, or the re-appointment of the auditors, where the reporting auditor is also the remuneration advisor to the same company.