A welcome and necessary tightening up – and sharpening up – of the combined code. Businesses will have to take note and act
The High Pay Centre welcomes the FRC’s proposed reforms to the combined code, set out in its consultation document:
https://www.frc.org.uk/news/december-2017-(1)/a-sharper-uk-corporate-governance-code-to-achieve
The emphasis on involving the views of the workforce and recognising the interests of stakeholders is welcome. “Shareholder primacy” is still a misguided and too narrow a guiding mission for business.
No incentive plan which pays out after five years should be labelled “long term”. But insisting on a five rather than three year period for such shemes is a modest improvement.
LTIPS remain a flawed instrument which should be dropped, however.
https://highpaycentre.org/pubs/no-routine-riches-reforms-to-performance-related-pay
We look forward to working with the FRC as it proceeds with this important consultation.
Stefan Stern
Director