The Investment Association (the “IA”) has published its Principles of Remuneration for 2018 and has written to remuneration committee chairs to advise them of the changes to the Principles.

The Principles set out the views of the IA’s members on the role of shareholders and directors in relation to the level and structure of executive remuneration.

The IA has made the following key changes (among others) to the Principles:

  • Remuneration policies should now focus on promoting “long-term” value creation.
  • A company’s remuneration policy should disclose any discretion its remuneration committee has in relation to a particular incentive scheme.
  • When reporting gender pay-gap and executive remuneration ratios, companies should provide figures in the context of their business and explain why they are appropriate.
  • When consulting with shareholders, companies should disclose the remuneration package as a whole, and not just changes to it.
  • Companies should disclose relocation benefits at the time of an executive’s appointment, should ensure they are in place for a limited period, and disclose that period to shareholders.
  • Companies should clearly disclose the definition of any performance measures linked to annual bonuses and any adjustments made to metrics in the company’s accounts. Bonus targets should be disclosed within twelve months of payment. Where a bonus exceeds 100% of salary, a portion should be deferred into shares.
  • The section on long-term incentive plans (LTIPs) has been updated to deal with performance conditions and vesting thresholds.