In a letter sent to the remuneration committee chairmen of FTSE 350 companies in September 2008, the Association of British Insurers announced that no amendments would be made this year to the guidelines on executive remuneration which it published in December 2007. The ABI considers that the existing guidelines remain relevant at this time.
The ABI did, however, draw attention to four specific points that it views as being pertinent in the current economic climate. In summary, they are as follows:
- any increases in salaries and bonus levels will be carefully scrutinised by investors;
- significant falls in share price should be taken into account when determining award levels under share incentive schemes - failing to do so may be perceived as providing a reward for failure;
- proposals that involve the provision of additional, non-performance based, remuneration to address succession or retention issues are unlikely to find favour with shareholders; and
- shareholders should be given adequate time and information to allow them to carefully consider any proposals for new or revised share incentive schemes.
It is anticipated that these guidelines will be subject to a more comprehensive review next year.
View the Letter to remuneration committee chairmen (web page).