Last week, it was reported that the UK government is planning to link non-executive rewards to the success of the company via performance fees to make the City of London more appealing to businesses post-Brexit.
However, Head of RI Policy & Research at EdenTree, Neville White believes that the UK government’s plan to change rules on non-executives’ remuneration is unwelcome news.
He said: “Press reports that the UK Government is reviewing whether to change the rules that condition how non-executives are remunerated are worrying and unwelcome. The UK has a respected and well established model that remunerates non-executive directors with a fee for their time; whilst they can receive this in shares, it cannot under current rules be linked to performance in order to maintain director independence in their capacity as advisors.”
“As responsible and sustainable investors committed to the highest standards of corporate governance we would resist any change that compromises the independent role that non-executives play in holding management to account – they lead the Audit, Remuneration and Nomination Committees at UK companies to assert that independent oversight.
“Government plans to link non-executive reward to the success of the company via performance fees are wholly misplaced and rejected by stewards of capital as potentially eroding the trust and accountability that non-executives bring to the role.”
“There is no case to answer and the Government must withdraw any proposals that compromises the current balance at UK plc.”