The Department responds to the ABI's first report on Board Effectiveness and its revised Principles of Remuneration.
In response to the Association of British Insurer’s first report on Board Effectiveness and its revised Principles of Remuneration, a BIS spokesperson said:
“Last week the Department for Business launched a discussion paper on ways to ensure executive pay is genuinely matched to performance and long term success.
“The key principles in the ABI’s guidance match what we have found in our conversations with shareholders, investors and business leaders so far - that excellent performance should be rewarded, but that there is a strong need to end “reward for failure.”
“So we welcome the ABI’s revised guidance and report on Board Effectiveness for their contribution to greater clarity and transparency for companies.”
Greater transparency in company pay and reporting
BIS is currently running a consultation on financial reporting requirements, which includes proposals to give investors greater clarity on how top businesses are run and how executive pay is matched to performance.
There is also a discussion paper on executive pay, focusing on how to curb pay asymmetry - where escalating pay at the top does not correlate with company performance.
The consultation on narrative reporting closes on 25 November. The discussion paper on executive pay asks for responses by the same date.
In June 2011, Vince Cable announced that Professor John Kay would conduct a review of UK equity markets and the role they play in supporting corporate performance. Professor Kay will publish an interim report next spring before making recommendations to the Secretary of State in a final report in the summer of 2012.