January 23, 2016

New UK Investor Remuneration Guidelines

The guidelines on executive remuneration (formerly known as the ABI guidelines) have only one substantive change. That is, long-term incentives should not pay out until at least five years after the date of award. This would still allow for the usual 3-year performance period, but a further holding period of two years would have to be imposed. this is a trend we are seeing in Australia, although the take up rate has been limited to ASX100. Interestingly, within the ASX50, most companies now have 4 year performance periods, and only a very few in this group have a holding period beyond the performance period. In effect, the IA has followed Fidelity, which advocated a global policy for minimum 5-year LTI terms early last year.

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