UK: Executive Remuneration Working Group publishes final report and recommendations

The Executive Remuneration Working Group, formed last year by the Investment Association to "bring forward proposals for a radical simplification of executive pay", published its final report and recommendations today: see here (pdf). Ten recommendations are made - none of which explicitly refers to simplification - under the following headings: increasing flexibility; strengthening remuneration committees and their accountability; improving shareholder engagement; increasing transparency on target setting and the use of discretion; and addressing the level of executive pay.  Other recommendations are also made in the report including, for example, that remuneration committee chairs should have at least one year's experience on the remuneration committee before becoming the chair of the committee.

The Financial Reporting Council, in a statement published today, described the Group's report as "thoughtful" and said that it would consider the recommendations concerning the skills and experience of the remuneration committee. The FRC also took the opportunity - perhaps mindful of its position as an advocate for the role of codes and best practice in shaping behaviour, given that further legislation in this area would appear imminent - to say that it welcomed the Government's current focus on improving corporate conduct, pointing in this respect to its recent report on corporate culture and the role of boards.