Dear Remuneration Committee Chairman,
Consultation with Shareholders on Remuneration
This year the Financial Reporting Council has published the UK Corporate Governance Code (updated from the former Combined Code) and
UK Stewardship Code. These Codes represent a significant development to the process of engagement between companies and shareholders
and are particularly relevant to executive share schemes and remuneration.
The ABI has decided not to make any changes this year to the Executive Remuneration Guidelines or to the Position Paper which was
published in December 2009. This reflects the view that these papers remain appropriate and useful at this time and for the forthcoming
reporting season. The papers can be sourced on the IVIS website via www.ivis.co.uk.
ABI believes it is in the interests of companies and shareholders to commit to a high quality of dialogue in the conduct of the remuneration
consultation process. However, drawing on recent experience, we would make three important observations:
- The process should be led by the Remuneration Committee Chairman;
- Remuneration Committees should ensure that there is adequate explanation of the link between remuneration and strategy;
- Shareholders should be given sufficient time to consider the issues at hand and to respond.
Mindful of the responsibilities under these Codes, the ABI and its members remain always on hand to discuss issues relating to executive
remuneration and to the Guidelines and Position Paper.
Yours sincerely,
Hugh Savill
Acting Director of Investment Affairs