The Department for Business, Innovation and Skills has published the Kay Review of UK Equity Markets and Long-term Decision Making.  The Review was commissioned to look at the impact of equity markets on the long-term performance and governance of UK quoted companies.  Among a series of measures designed to end a culture of “short-termism” among the investment community is one surprise package on executive director remuneration.  Under the heading "Establishing the right incentives" the Review recommends that long-term performance incentives should be provided only in the form of company shares to be held “significantly beyond” the director's tenure with the company.  Asset fund managers could also face similar restrictions: performance incentives should be provided in the form of an interest in the fund to be held at least until the manager is no longer responsible for that fund.

Quite how these suggestions might fit with the Government's current work in progress, in the Enterprise Bill, on enhancing shareholder voting rights on executive pay, is unclear.

The Review can be found here: Kay Review, with the part on incentives at section 11.