The Financial Reporting Council (FRC) has today published a consultation on whether to amend the UK Corporate Governance Code to address a number of issues relating to executive remuneration. The FRC announced last year its intention to consult after the Government’s legislation on voting and reporting on executive remuneration had been finalised. That legislation has now been enacted and came into force on 1 October 2013.
The FRC is now consulting on three specific proposals: clawback arrangements; whether non-executive directors who are also executive directors in other companies should sit on the remuneration committee; and what actions companies might take if they fail to obtain at least a substantial majority in support of a resolution on remuneration. The FRC does not intend to revisit matters that have been addressed in the Enterprise and Regulatory Reform Act 2013 and the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013.
FRC Chairman Baroness Hogg commented:
“The Government’s new legislation underlines the importance of Boards and investors engaging on directors’ remuneration. The FRC is undertaking this consultation to understand if there is a case for changes to the Code.
There is no presumption on the FRC’s part as to the outcome. All interested parties will have an opportunity to make their views known before we reach a final decision.”
If changes to the Code are ultimately proposed, they will be subject to consultation in the first quarter of 2014. The new Code would then apply to accounting periods beginning on or after 1 October 2014.
Notes to editors:
The FRC’s Financial Reporting Lab previously published two reports on specific aspects of remuneration reporting relating to the single figure for remuneration and to the reporting of pay and performance. These reflected the suggestions of companies and investors participating in the Lab’s projects of relatively simple disclosures that would be helpful to investors. The reporting suggestions have been enabled by the new Regulations. Read or download the reports.
The FRC is responsible for promoting high quality corporate governance and reporting to foster investment. We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work. We represent UK interests in international standard-setting. We also monitor and take action to promote the quality of corporate reporting and auditing. We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.