Latest IA guidance on executive remuneration

The Investment Association (IA) has published its annual letter to Remuneration Committee Chairs as well as its updated Principles of Remuneration.

The Principles have been updated to provide additional clarity on the IA’s position on various areas, including:

• Pensions – Pension contributions for executives should be aligned with those available to the rest of the workforce by the end of 2022. In addition, the IA’s letter states that the level of contributions for executives at which IVIS will red top the remuneration report, if there is no credible action plan to align contributions by the end of 2022, will reduce from 25% to 15%.
• Personal and ESG performance measures – Whilst the IA continues to expect the majority of annual bonus performance measures to be financial, where personal and ESG (environmental, social and governance) performance measures are used they must be quantifiable and clearly linked to a company’s strategy and long term value creation. In addition, the achievements which justify payments as a result of personal or strategic measures should be disclosed.

The IA has also updated its separate guidance on the IA’s expectations on how UK listed companies should reflect the impact of Covid-19 on executive pay. Particular areas of focus in the updated guidance include annual bonuses and performance measures.

For further information, see the e-bulletin prepared by our Remunerations and Incentives team.