The final report of the Executive Remuneration Working Group calls for a move away from the current model of long-term incentive plans used to reward senior executives. The report proposes ten recommendations to rebuild trust in executive pay structures in the UK, including a call for boards to explain why they have chosen their company’s maximum pay level, making reference to pay ratios between CEOs and different employee groups in the organisation.
It acknowledges Teresa May’s recent statement on binding pay votes, suggesting that binding votes might be used in the case of companies where a previous year’s remuneration report received less than 75% support from shareholders.
Chair of the Group, Nigel Wilson, said:
‘We need to restore public confidence in executive pay. Our report shows shareholders, boards and executives agree the current approach is not working, and want constructive collaboration to get it right.’
The Executive Remuneration Working Group is an independent panel of experts set up last year to review pay structures at UK listed companies. The Investment Association provides secretariat services to the Working Group.