Ellason lens on… Investment Association pay principles update

Fri 23, February

The Investment Association (‘IA’) has today issued a letter (link) to FTSE Remuneration Committee chairs, confirming that its Remuneration Principles, which would normally have been updated around November last year, will remain unchanged for now and be updated later in 2024. The delay is as a result of the IA’s roundtable meetings in September generating significant debate around the pay implications of the discussions being held more generally around the competitiveness of the UK listing environment. As a consequence, the IA will be conducting a ‘more fundamental’ review of the Principles during 2024, with the expectation they will (i) be simplified, and (ii) support a competitive market.

In the interim, the IA has confirmed its priorities for the 2024 AGM season, including a desire for continued restraint on executive salary increases and for committees to clearly demonstrate the alignment between pay and performance. These themes have been covered in recent Lens emails on other shareholder representative/proxy agency guidelines, and so we do not repeat them here.

Ellason commentary: We are excited by the potential simplification and evolution of the Remuneration Principles in 2024, particularly in relation to how they can be used to ensure a competitive listing environment. It is critical that a UK listing is attractive to large international companies, and investor acceptance of international pay norms is an important aspect of this issue. We look forward to the Principles reflecting how attitudes and opinions have evolved in recent months, based on our experience in dealing with corporates and investors. We remain optimistic that executive pay in the UK can be highly performance-oriented and aligned with shareholder interests, whilst also being competitive within the global marketplace.

Please do not hesitate to contact any of the Ellason team should you wish to discuss this issue further.