The UK Institute of Chartered Secretaries and Administrators has recently released updated guidance for remuneration committees and an updated model terms of reference. The full details are only available to members of ICSA, but the main changes include:
- Limiting the extension of appointments to the committee to two further periods of three years (following an initial period of appointment of up to three years), provided that the members continue to be independent.
- A new obligation on the company secretary to ensure that the committee receives information and papers in a timely manner to enable proper consideration to be given to issues.
- The Committee should have responsibility for setting the remuneration policy for all executive directors and the company’s chairman.
- The objective of the policy should be to attract, retain and motivate executive management of the quality required to run the company successfully without paying more than is necessary, having regard to views of shareholders and other stakeholders, the risk appetite of the company and alignment to the company’s long strategic term goals.
- Ensuring that the provisions regarding disclosure of information, including pensions, as set out in the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as updated), are fulfilled.
- Ensuring that the company maintains contact as required with its principal shareholders about remuneration, including an express requirement for the committee to give due consideration to guidelines published by the Association of British Insurers and the National Association of Pension Funds, as appropriate.
