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27/02/2017
Investors are asking more from Remuneration Committees in 2017 and will increasingly hold them to account for remuneration decisions, according to a report from EY. Recent examples of payment for failure, high payments to CEOs despite a pension deficit in the organisation’s pension fund, and rising differentials between top and average pay are all factors driving this trend, EY suggests.
This shareholder pressure is in addition to government moves to increase the employee, customer and stakeholder voice in corporate Britain, including potentially binding shareholders votes, the consultant points out.
‘The role of the Remuneration Committee will continue to be a challenging one as they navigate the various principles and guidelines issued by investors and their representative bodies and, potentially in due course, new regulations. Simplification of remuneration structures is likely to be a key theme for the future with the potential for removal of certain elements of the traditional package and reducing volatility from year to year. This may require more radical thinking on the part of both companies and shareholders.’