The IA has published amendments to its principles of remuneration for 2022. The main changes are on the following topics:
- ESG – companies should use ESG metrics that are quantifiable, appropriately stretching and linked to company strategy. Companies that have not yet incorporated ESG metrics into their remuneration policy should explain to shareholders what their intentions are;
- Executive pensions – investors expect new executive directors to be appointed on a pension contribution rate that is aligned with the rate given to the majority of the company’s workforce. The contribution rates for incumbent directors should be aligned to the workforce contribution rate by 31 December 2022 and shareholders do not expect that compensation will be awarded for this change; and
- Value creation plans – VCPs should only be used where there is a clear rationale appropriate to the circumstances of the company. They must incorporate a limit on the overall number of shares and valuable awards, and the remuneration committee should be able to explain why such cap is appropriate.