Corporate Governance Code increases reporting on remuneration practices

NEWS
Published
May 12th '21
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  • FTSE 350 companies are disclosing more information on remuneration
  • A Majority of companies report linking individual rewards to strategy and long-term performance
  • However, there remains a lack of detail on the application of the Code principles and provisions

 

Companies are better aligning their Board remuneration policy and practices with long-term shareholder interests according to new research conducted by the Financial Reporting Council (FRC) and The University of Portsmouth. This research assessed a sample of FTSE 350 companies to determine the extent to which they have applied requirements set by the updated UK Corporate Governance Code in 2020.

 

The FRC is pleased that the findings support those from the Review of Corporate Governance Reporting published in November 2020. Overall, the report showed that the Code requirements on directors’ remuneration have had a positive impact on reporting. However, many company reports lacked detail and outcomes so whilst companies are giving more information there is still a danger of boilerplate disclosures.

 

This is part of a series of research commission by FRC to support future policy and improve guidance for companies when reporting against the UK Corporate Governance Code.

 

Source: FRC

 

Background

The FRC’s purpose is to serve the public interest by setting high standards of corporate governance, reporting and audit and by holding to account those responsible for delivering them. The FRC sets the UK Corporate Governance and Stewardship Codes and UK standards for accounting and actuarial work; monitors and takes action to promote the quality of corporate reporting; and operates independent enforcement arrangements for accountants and actuaries. As the competent authority for audit in the UK the FRC sets auditing and ethical standards and monitors and enforces audit quality.