FRC welcomes Executive Remuneration Working Group report
The Financial Reporting Council (FRC) has welcomed the publication of the report by the Executive Remuneration Working Group (ERWG).
The FRC has announced that it will consider the report’s recommendation on the need for Remuneration Committee (RemCo) chairs to have the skills and experience necessary to undertake that role as part of a wider review of measures that the FRC could take to address public concern.
The ERWG was established by the Investment Association (IA) in the Autumn of 2015 as an independent panel to address the concern that executive remuneration has become too complex and is not fulfilling its purpose.
It published its interim report in April 2016, and consulted widely throughout May and June 2016 with a wide range of stakeholders before forming its final recommendations which are set out in its final report.
The FRC has also welcomed the UK Government's focus on improving corporate conduct, including on remuneration, and its determination to strengthen the voice at the Board of a wider group of stakeholders.
This issue was addressed in the FRC’s recent report 'Corporate Culture and the Role of Boards', which noted how continuing inconsistent alignment between executive remuneration and company performance, and between the remuneration of senior executives and employees in some companies has led to an increasing lack of public confidence.
The FRC believes that boards and remuneration committees must do more to link culture and values to the design of remuneration policies.
Download: FRC’s report on corporate culture.