The CIPD has launched a set of general principles on executive pay designed to act as a framework to help companies develop executive remuneration policies, practices and structures. The principles provide a framework to test remuneration practices which should be sustainable over time particularly in the context of the current debate around executive pay.
The National Association of Pension Funds has written to the Chairmen of Britain’s top 350 companies urging executive pay restraint and making it clear that company remuneration should be aligned with long-term interests of shareholders, including pension funds. The growing trend of deferring parts of bonus payments into shares is good practice and the Association expects more companies to go down this route in 2010.
In the meantime the Chancellor introduced the Financial Services Bill in the House of Commons on 19 November 2009. The Bill contains a requirement for the FSA to regulate financial sector remuneration, to promote effective risk management and compliance with international standards. The Bill contains provisions about executives’ remuneration reports and new FSA duties and powers to regulate remuneration.