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A new approach to executive pay?

In July 2019, ICAEW and Hermes convened a senior panel of remuneration committee chairs and investors to explore whether a new approach to executive pay is needed. Realigning executive pay is an essential part of restoring trust in business.

2019 is a key year in the UK executive pay landscape, with the majority of companies preparing new remuneration policies for a binding shareholder vote in 2020. By bringing these stakeholders together, we heard from company directors on their practical views on the challenges of devising a remuneration policy which meets the different expectations of a wider number of stakeholders, as well as their views on alternative structures. We also heard the investor perspective on executive remuneration and what they would like a company to think about as they approach the design of their new policies, including views on from moving away from salary, bonus and long-term incentive plan structures.

Questions from the audience challenged the focus on executive pay, and suggested that the greater issue was how access to an abundance of globally mobile talent suppresses wage growth. Issues around the UK’s competitiveness for attracting and retaining top talent were also raised. The panel called on remuneration committees to be mindful of global pay structures, not just those in their jurisdiction.