No images? Click here ![]() Executive briefing – November 2022Glass Lewis 2023 guidelines and UK Autumn StatementOur latest executive briefing covers the Glass Lewis 2023 proxy voting guidelines and some of the remuneration related announcements made at the UK Autumn Statement. Glass Lewis 2023 guidelines Glass Lewis has published its 2023 proxy guidelines; the new guidelines contain a number of noteworthy changes to the previous version, as follows: Linking pay to E&S criteria: Where companies have not included explicit environmental or social indicators in their incentive plans, Glass Lewis expects to see additional disclosure on “how the company’s executive pay strategy is otherwise aligned with its sustainability strategy”. It also continues to believe that where E&S metrics are incorporated into remuneration plans they should be tailored to reflect each company’s unique circumstances and sufficient disclosure should be provided to allow investors to understand how the chosen criteria align with company strategy. Use of discretion: Glass Lewis has expanded its guidance on the exercise of Remco discretion in relation to incentive payouts. It calls for companies to provide “thorough discussion” of how significant events were considered by the Committee, whether it resulted in the exercise of discretion or not. It provides a couple of examples of relevant events, such as the exclusion of one-off accounting charges or the occurrence of health and safety failures that are not otherwise captured in LTI metrics. Pensions: Pension provisions for executive directors, both those newly appointed and incumbent executives, are expected to be in line with those available to the majority of the wider workforce by the end of 2022. This is consistent with the ‘direction of travel’ that has been signalled by other UK institutional investors/ proxy agencies for some time, and will not be a surprise to most UK remuneration committees. Overboarding: Glass Lewis has updated its guidance on acceptable levels of ‘external commitments’ for directors. Executive officers will generally be considered to be overboarded if they have more than one additional external plc role (reduced from two previously). Non-executive board chair positions at UK and European companies will be considered as two board seats given the increased time commitment associated with these roles. Combined incentive plans: Glass Lewis has provided specific guidance on ‘combined incentive plans’ (also known as ‘omnibus’ or ‘bonus banking’ plans). These aggregate elements of a bonus and long-term incentive, whereby awards are subject to short-term performance with a portion deferred, subject to time-vesting restrictions or other performance criteria. Glass Lewis will generally vote against this type of plan unless:
Committee accountability: Glass Lewis has clarified that it may recommend voting against the entire RemCo based on “egregious remuneration practices”, including situations that have persisted for several years. It gives examples such as approving large one-off payments, the inappropriate use of discretion in determining variable remuneration, and/or sustained poor pay-for-performance practices. Diversity (gender and ethnicity): Glass Lewis will monitor companies progress towards 2023 market best practice regarding gender and ethnic diversity. It will consider recommending against the nomination committee chair in subsequent years in cases where a board has made insufficient progress and has not disclosed any cogent explanation or plan to address these issue. Cybersecurity risk: Glass Lewis will generally not generally make voting recommendations on the basis of a company’s oversight or disclosure concerning cyber-related issues. However, it will closely evaluate a company’s disclosure in instances where cyber-attacks have caused significant harm to shareholders and may recommend against appropriate directors should it find such disclosure or oversight to be insufficient. UK Autumn Statement Jeremy Hunt, the latest Chancellor of the Exchequer, yesterday announced his ‘Autumn Statement’. From an executive remuneration perspective, there were a number of significant announcements in the Autumn Statement. We have summarised these below, as well as some of the ‘emergency’ announcements made previously by Mr Hunt when he first took office last month.
If you wish to discuss anything arising from this briefing, please ask your usual contact at FIT or call us on 020 7034 1111 or email us at Info@fit-rem.com. Rory Cray Darrell Hare Matt Higgins John Lee Sahul Patel Iain Scott Richard Sharman Katharine Turner Matthew Ward This paper is intended to be a summary of key issues but is not comprehensive and does not constitute advice. No legal responsibility is accepted as a result of reliance on the contents of this paper. This email is confidential. If you are not the intended recipient, please delete the email and do not use it in any way. FIT Remuneration Consultants LLP (FIT) does not accept or assume responsibility for any use of or reliance on this email by anyone, other than the intended addressee to the extent agreed in the relevant contract for the matter to which this email relates (if any). Consistent with data protection regulations, if you would like to review our records relating to your contact details or to request their removal from our systems, please contact us at info@fit-rem.com. While all reasonable care has been taken to avoid the transmission of viruses, it is the responsibility of the recipient to ensure that the onward transmission, opening or use of this message and any attachments will not adversely affect its systems or data. No responsibility is accepted by FIT in this regard. FIT is a limited liability partnership registered in England under registered number OC364396, with its registered address at 1 Duke Street, London, W1U 3EA. |