The Financial Reporting Council's (FRC) Financial Reporting Lab (the Lab), which was set up by the FRC to improve the effectiveness of corporate reporting in the UK, has published a report on the reporting of pay and renumeration.
At the request of the Department of Business Innovation and Skills (BIS), the Lab undertook a project on remuneration exploring the views of investors and companies on two new aspects of the draft reporting regulations on remuneration:
- scenario charts demonstrating how directors’ pay varies with performance, and
- a chart comparing CEO pay based on the single figure for remuneration, with company performance, measured using Total Shareholder Return (TSR).
Director of the Financial Reporting Lab, Sue Harding, said:
“This second project has again achieved significant agreement among participating members of the investor and corporate communities. Participants favour a simplified version of the scenario charts proposed by BIS. They also conclude that, rather than replacing the current five year TSR chart, this should be retained and be supplemented with a simple table setting out historic levels of CEO pay together with information on the level of performance-related elements of pay”.