FAIR PAY
ABI issues revised guidance on executive pay
The Association of British Insurers, the UK’s leading shareholder group, has published revised Principles of executive remuneration.
The revised Principles of Remuneration are designed to help companies to better understand the views of institutional investors on executive pay. They are the latest update to ABI guidance which has evolved over 30 years. “They address investors’ renewed concern on executive pay,” the ABI says.
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Key principles of the guidance show that company boards should:
“Support appropriate reward for exceptional performance.”
“Strongly resist any payment for failure.”
“Understand that excessive or undeserved remuneration undermines the efficient operation of the company, adversely affects its reputation and is not aligned with shareholder interests.”
“Not engage in crude benchmarking when seeking to justify increases.”
The ABI has been publishing guidelines on executive pay since the 1970s. The guidelines were last revised in 2006 and reissued in 2007.
A final word
“Effective boardrooms should be the powerhouse of the UK economy. The board effectiveness report and long standing remuneration guidelines represent UK best practice. They aim to ensure that remuneration is linked to performance and shareholders’ interests are protected. We continue to favour evolution, building on what we have learnt from recent years to make sure companies act in shareholder’s interests and deliver long term economic growth that will benefit society as a whole.” - Otto Thoresen, Director General, Association of British Insurers.
Want to know more?
Title: ABI Principles of Remuneration, Association of British Insurers, 29 September 2011.
Availability: The guidance is available at www.ivis.co.uk/ExecutiveRemuneration.aspx.
The ABI press notice is available here: www.abi.org.uk/Media/Releases/2011/09/UK_boardrooms_given_clear_guidance_on_executive_pay_and_effective_performance.aspx
The Association of British Insurers is the “voice of the UK’s insurance, investment and long-term savings industry”. More information is available at www.abi.org.uk.