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The ABI today published an updated version of its guidelines on executive remuneration.  Reviewed annually, the guidelines are part of a series of initiatives developed to help ABI members in their corporate governance work, including responsible exercise of their voting rights.   The newly revised guidelines take into account developments over the past year, as well as the forthcoming introduction of new International Accounting Standards. 

The effect of the main amendments is to introduce:

· A clarification of the view that chairmen should not receive share incentives geared to performance of the share price.
· A call for greater transparency with regard to bonuses.
· Measures to discourage windfall payments to executives on change of control of a company.
· A recommendation that companies accrue dividends on long term incentive plans, which would be paid to the recipients once the shares involved vest.
· A recommendation that companies publish in advance the approach they will take to adjusting performance hurdles after the introduction of new accounting standards, which may make reporting earnings more volatile.
 

Peter Montagnon, Head of Investment Affairs at the ABI commented:

“We have made some progress over the last year, but shareholders need to be vigilant and strike a careful balance.  Listed companies have to compete with the private equity sector for executive talent, but, as investors, we also have to do what we can to preserve the integrity of the remuneration system.  We cannot do that unless reward is linked to performance.”

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Notes

1. Enquiries to:
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 Malcolm Tarling  020 7216 7410 (Mobile: 07776 147667)
 
2. The ABI is the trade association for Britain’s insurance industry. Its more than 400 member companies provide over 97% of the insurance business in the UK. It represents insurance companies to the Government, and to the regulatory and other agencies, and is an influential voice on public policy and financial services issues. ABI member companies hold more than a fifth of all investments traded on the London Stock Exchange, on behalf of millions of pensioners and savers.

3. An ISDN line is available for broadcasts.

Copies of all ABI news releases, together with other information from the Association, can be seen on our website http://www.abi.org.uk

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