ICGN supports public disclosure of remuneration policies
November 2nd, 2023
The International Corporate Governance Network (ICGN) has backed calls by the Fair Reward Framework for companies to publicly disclose their executive remuneration policies.
In its response to the asset owner-backed Fair Reward Framework, ICGN called for the framework to include public disclosure of any remuneration policy by the board.
ICGN said companies should provide relevant reports for investors to compare remuneration packages with their long-term strategic objectives.
The organisation also urged the framework to include a ‘malus and clawback’ component.
This would ensure companies and boards could withhold payment of any remuneration or sum (‘malus’) or recover remuneration (‘clawback’) if any serious misconduct took place.
ICGN said it “appreciates the work of the asset-owner led group to provide a framework to find appropriate solutions to the complex issues surrounding overall remuneration and fairness for executives and in the workplace, which can provide incentives supporting a high-calibre workforce and creating shareholder value”.
It also praised the framework for its alignment with the ICGN Global Governance Principles, which aim to assist boards of directors in effectively managing remuneration for both management and the workforce.
The Fair Reward Framework opened for public consultation in September and aims to provide a structure for companies to consider what factors lead to success and how employees are incentivised.
The framework also aims to respond to longstanding debates around executive remuneration, with negative coverage on the salaries of top-level workers creating controversy.
Its proposed ‘fairness indicators’ address fair reward, robust pay setting processes and consultative engagement with shareholders, and enables the ranking of individual companies.
The Fair Reward Framework will assess a focus list of FTSE 100 companies in its pilot year and eventually aims to apply its indicators to wider range of companies across multiple markets.
Last Updated: 2 November 2023