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Executive Pay

(c) Can Stock Photo / pressmasterExecutive pay, executive remuneration, say on pay, bonus or LTIP. Whatever it is called, CEO pay has become one of the most talked about issues in corporate governance in recent years.

Executive Pay Guidelines

Over the past 30 years the Association of British Insurers (ABI) has been the primary investor body responsible for setting guidelines on pay.

The 2013 ABI Principles of Remuneration were the last set of principles issued by the ABI directly. Following the merger of ABI Investment Affairs with the Investment Management Association (now the IA) in June 2014, the Investment Association assumed responsibility for all shareholder guidance previously issued by the ABI. In 2015 The Investment Association Principles of Remuneration were published.

In addition to our own Say on Pay Governance Rating, Manifest’s  research reports take full account of the IA principles and investor best practice principles.

History of the ABI Executive Pay Guidelines

The following timeline marks the development of the guidelines over the years. [Copies of original documents will be uploaded in due course]

Source: The ABI Guidelines: compliance and performance in the FTSE-100. [Link]

Association of British Insurers (1987) Share Option and Profit Sharing Incentive Schemes. Summary of Revision to Guidelines to Requirements of Insurance Offices as Investors. ABI, 51 Gresham Street, London EC2V 7HQ (13 July, addendum 6 May 1988, and amended 14 August 1991). [Link]

Association of British Insurers (1991) Share Incentive Scheme Guidelines. Memorandum. ABI, 51 Gresham Street, London EC2V 7HQ.

Association of British Insurers (1993) Share Scheme Guidance. A joint statement from the investment committees of the ABI and NAPF. ABI, 51 Gresham Street, London EC2V 7HQ. [Link]

Association of British Insurers (1994) Long Term Remuneration for Senior Executives, (May) ABI, 51 Gresham Street, London EC2V 7HQ. [Link]

Association of British Insurers (1995) Share Option and Profit Sharing Incentive Schemes. (February) ABI, 51 Gresham Street, London EC2V 7HQ. [Link]

Association of British Insurers (1999) Share-Based Incentive Schemes – Guideline Principles. Interpretation and Application in the Context of Currently Evolving Practice. (19 July) ABI, 51 Gresham Street, London EC2V 7HQ.

Association of British Insurers (1999) Institutional Investment – Initiatives on responsible voting linking pay to performance. Press release, July 19. [Link]

Association of British Insurers (2001) Guidelines for Share Incentive Schemes. (1 March) ABI, 51 Gresham Street, London EC2V 7HQ.

Key Steps in Executive Pay Guidelines

Date: Event:
April 1984 Finance Act 1984
Nov 1984 NAPF: ‘Share Scheme Guidelines’
April 1985 BIA Investment Protection Committee
July 1987 ABI: ‘Share Option and Profit Sharing Incentive Scheme’
March 1988 NAPF: ‘Share Schemes’
May 1988 ABI: ‘Addendum to Share Option and Profit Sharing Incentive Scheme Guidelines’
Aug 1991 ABI: ‘Second Addendum to Share Option and Profit Sharing Incentive Scheme Guidelines’
Dec 1992 Cadbury Committee Report
July 1993 Joint NAPF-ABI statement on Share Schemes
May 1994 ABI: ‘LT Remuneration for Senior Executives’
Sept 1994 ASB: ‘Urgent Issues Task Force Abstract 10’
Feb 1995 ABI: ‘Share Option and Profit Sharing Incentive Schemes’
July 1995 Greenbury Report
May 1996 ABI: ‘Long-term Incentive Schemes – note of emerging good practice’
Jan 1998 Hampel Report
June 1998 Combined Code
June 1999 ABI: ‘Share Option and Profit Sharing Incentive Schemes’
July 1999 DTI: ‘Directors’ Remuneration. A consultative document’
July 1999 ABI: ‘Share Incentive Schemes – a statement of principles’ and ‘Share-Based Incentive Schemes – Guideline Principles’
March 2001 ABI: ‘Guidelines for Share Incentive Schemes’
Dec 2002 ‘Directors’ remuneration Report Regulations 2002’
Jan 2003 Higgs Report
June 2003 DTI: ‘Rewards for Failure. A Consultative Document’
July 2003 ‘The Combined Code of Corporate Governance’
Dec 2003 ABI: ‘Principles and Guidelines on Executive Remuneration’
Dec 2004 ABI: ‘Principles and Guidelines on Remuneration’