The collapse of Carillion has raised many issues relating to public procurement, the actions of the board and the role of the auditors. But a press release by the Institute of Directors suggesting that in 2016 Carillion relaxed the clawback conditions that applied to bonuses has raised questions over remuneration governance. The change seems to … Continue Reading
Although we’re not in the business of crystal ball-gazing, here are some possible issues relating to Brexit and executive pay, particularly share-based remuneration, that we’d like to throw into the pot (unless that’s too much of a mixed metaphor). It seems unlikely that post-Brexit the UK would impose restrictions on overseas issuers offering their shares … Continue Reading
In the last week, it has been reported that Standard Chartered has launched “accountability reviews” to discover whether bonuses can be recovered from any employees found to be responsible for breaches of compliance and risk-management rules. Apparently some bonuses have already been clawed back by the bank and it stated that it would do so … Continue Reading
The recent clawback laws being discussed and introduced in the UK and the US differ quite markedly and represent two almost entirely different approaches to recovering “erroneously” awarded incentive-based compensation. So which flavour do you prefer? One shouldn’t forget, of course, that the PRA’s provisions regarding clawback are only one half of a two pronged … Continue Reading
The Prudential Regulation Authority (PRA) has published guidance addressing areas of uncertainty in respect of the remuneration changes under CRD IV. The guidance takes the form of a letter on the PRA’s remuneration code webpage to the chairs of the remuneration committees of PRA-authorised firms. The main controversial element of CRD IV was in respect … Continue Reading
Amongst its recently-announced proposed package of banking reforms, the UK Labour party has suggested that claw-back on bankers’ bonuses should be extended to ten years from the date of payment. With effect from 1 January this year, the Bank of England’s Prudential Regulatory Authority imposed a mandatory claw-back period of seven years from the date of … Continue Reading
On 18 December, the GC100 and Investor Group published an eagerly awaited update to its Guidance on DRRs. The update follows the GC100’s review of its original Guidance (which was released in September 2013) in light of the 2014 AGM season and recent developments, and notes that the update document should now be regarded as … Continue Reading
As the dust settles on the eagerly awaited HMRC v Martin decision (see our previous blog post), thoughts are inevitably turning to how that decision impacts on an employer’s approach to clawback payments, particularly in the world of variable remuneration. Whilst the judge in the Martin decision was clear that his conclusion turned on the … Continue Reading
The pressure for companies and firms to claw back earnings paid to executives under various incentive plans has been steadily growing over the last couple of years. There was the clarification in the ABI guidelines on directors’ remuneration on which we reported last November, to PIRC’s two penn’orth on the topic in March, the Bank … Continue Reading
The Financial Reporting Council announced on 17 September the release of the updated version of the Corporate Governance Code, after its consultation in April about proposed amendments to the sections on remuneration. There has been a good deal of shuffling sentences about, but there are two main changes that will need to be taken into account by companies for … Continue Reading
Bankers working in the UK will be the first group of employees subject to mandatory clawback requirements in relation to their vested variable remuneration. This follows the Bank of England’s Prudential Regulatory Authority’s (PRA) policy statement on clawback. From 1 January 2015, any awards made by firms subject to the Remuneration Code (namely banks, building societies … Continue Reading
The topic of clawback, and indeed malus, has been a bit of a strange animal to date. You know what it is when you see it, but trying to adequately describe when it is triggered and how it takes effect is a little more challenging. The Financial Reporting Council’s consultation paper on reforming the UK … Continue Reading
Ahead of SEC Rulemaking under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the topic of amending clawback policies is a sensitive one for companies and boards. At some point we know that rules will be enacted, but companies and boards struggle with what (if anything) to do in advance. The clawback aspects … Continue Reading
