Consultation on executive pay published

The Financial Reporting Council (FRC) has published a consultation on executive remuneration.

The consultation follows legislative changes, which came in on 1 October, which made votes on remuneration reports binding.

It will cover three specific areas:

  • Clawback arrangements.
  • Whether non-executive directors who are also executive directors in other organisations should sit on the remuneration committee.
  • What actions organisations might take if they fail to obtain at least a substantial majority in support of a resolution on remuneration.

If changes to the UK Corporate Governance Code are ultimately proposed, they will be subject to consultation in the first quarter of 2014. The new code would then apply to accounting periods beginning on or after 1 October 2014.

Baroness Hogg, chair of the HRC, said: “The government’s new legislation underlines the importance of boards and investors engaging on directors’ remuneration.

“The FRC is undertaking this consultation to understand if there is a case for changes to the code.

“There is no presumption on the FRC’s part as to the outcome. All interested parties will have an opportunity to make their views known before we reach a final decision.”