The Investment Association Principles of Remuneration meaning

In this issue: Corporate governance Q&As New and revised content Key dates for your diary Weekly highlights across other practice areas Corporate governance ISS Governance has released its 2025 Proxy Voting Guidelines for the UK and Ireland, following the publication of its updated benchmark policies on 17 December 2024 (see: Share Incentives weekly highlights—19 December 2024—Corporate governance), and these will apply to shareholder meetings held on or after 1 February 2025. The revised guidelines mirror the changes announced in December, many of which incorporated amendments made by the Investment Association (IA) to its Principles of Remuneration issued in October 2024. Nonetheless, departing from the new IA Principles, ISS Governance considers a 5 per cent dilution limit to remain widely viewed as best practice by many investors—and therefore expects that authorisations to issue new shares under discretionary share schemes should not exceed 5 per cent of the issued ordinary share capital over any rolling ten-year period; where this is breached, an...

In this issue: Company incorporation and constitution Directors and company secretaries Corporate governance Accounts and reports Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Company incorporation and constitution Independent Expert Panel publishes report on corporate re-domiciliation The Independent Expert Panel on Corporate Re-domiciliation (Panel) issued its report on 1 October 2024. Established by the Department for Business and Trade in December 2023, the Panel was tasked with crafting proposals to revise the legal framework so companies incorporated overseas could move to the UK while keeping the same legal personality. The report backs a two-way re-domiciliation regime, permitting entities registered outside the UK to become UK companies, and allowing UK companies to re-domicile abroad. It sets out features of the regime, including organisational eligibility, required information for re-domiciliation, and the application pathway. The government welcomes the report and plans to consult on the regime’s design in due...

In this issue: Updated Investment Association Principles of Remuneration—analysis of key changes Tax treatment HMRC Manuals tracker Useful information Weekly highlights from other practice areas Updated Investment Association Principles of Remuneration—analysis of key changes Following the Investment Association’s release last week of its refreshed Principles of Remuneration (see: Share Incentives weekly highlights—10 October 2024), we have now issued an in-depth review of the principal changes made, covering overarching themes, areas where companies now have greater discretion, new guidance, and points of ambiguity within the updated document. See News Analysis: Updated Investment Association Principles of Remuneration—analysis of key changes. 16 October 2024 Tax treatment HMRC has issued updated guidance concerning ‘arrangements’ for EMI. New material has been incorporated into the Employee Tax Advantaged Share Schemes User Manual at ETASSUM52030 (Enterprise Management Incentives (EMI)—qualifying companies—independence requirement), with an additional page also added at ETASSUM52031 (Enterprise Management Incentives (EMI)—qualifying companies—arrangements leading to loss of independence). In essence, the update concerns...

ARCHIVED : This Practice Note has been archived and is not maintained. The government set out a series of actions in response to the coronavirus (COVID-19) emergency. For more information, see the following Practice Notes: Coronavirus (COVID-19)—tax implications [Archived] Coronavirus (COVID-19)—key issues for Corporate lawyers This Practice Note offers a high-level overview of how the coronavirus situation affected executive remuneration and monitors updates issued by the government and the principal institutional investor organisations. For wider coverage of the impact on share plans, refer to Practice Note: Coronavirus (COVID-19) impact on share schemes. For broader background on the leading institutional investor bodies, see Practice Notes: Directors’ remuneration—institutional investor guidelines and Comparison of UK Corporate Governance remuneration principles. The coronavirus job retention scheme and the Job Support Scheme (JSS) The Coronavirus Job Retention Scheme (CJRS), first announced on 20 March 2020, supported UK employers through grants to help them continue paying up to 80% of salary for unworked hours (capped at £2,500...

A long-term incentive plan (LTIP) Within listed companies, the term LTIP typically refers to executive share arrangements whereby senior staff receive share-based awards that vest over no less than three years, usually followed by a further two-year holding requirement. For an introduction to LTIPs, see Practice Note: What is a long-term incentive plan? Using LTIPs to drive senior executive performance has become accepted market practice among listed companies. Yet, in July 2016, the Executive Remuneration Working Group—an independent body formed by the Investment Association—issued its final report on the design of executive pay, urging every company to assess whether the conventional LTIP model remained suitable for its business or if it should depart from that approach. In the Working Group’s view, rather than defaulting to an LTIP, companies must identify the structure that best fits their organisation and engage with shareholders to gauge their views on the preferred framework. The emphasis was on careful selection of pay structures and meaningful dialogue with shareholders before settling on any model, rather...

This Practice Note explains how the Investment Association (IA) remuneration principles apply to employee benefit trust (EBT). These principles sit within the IA Principles of Remuneration. It describes their application in the EBT context. The IA remuneration principles—key messages Pension funds, insurers and related institutions commonly place their clients’ capital in UK equities. As a result, such institutions form a significant slice of the shareholder base across companies listed on the London Stock Exchange and other markets. Acting for these members, the IA articulates clear expectations on senior executive pay and speaks out on what it regards as important. The IA Principles of Remuneration are broad in scope, spanning numerous dimensions of executive reward and practice. They set out the boundaries its members view as critical when designing pay frameworks and policies, and also address the role of the remuneration committee...