UK watchdog seeking companies, investors for pay disclosure project

Request from the FRC’s Financial Reporting Lab

The Financial Reporting Council, the UK watchdog, is seeking listed companies and investors to participate in a project to test proposed executive pay disclosure regulations.

The FRC’s Financial Reporting Lab has been asked by the government to obtain the views “from the corporate and investment community” on two specific disclosure requirements proposed in a consultation by Business Secretary Vince Cable in June.

They are, firstly, “Scenarios for what directors will get paid for performance that is above, on and below target”. The second topic is to “Chart company performance, CEO pay and company performance measured using Total Shareholder Return (TSR).”

The Lab is seeking a number of companies to develop example formats of the disclosures proposed by Cable, in a project lasting around three months. The project will help shape the final regulations.

“The disclosures developed by the companiesparticipating in the project will be tested with the investment community through a series of meetings facilitated by the Lab,” the FRC says.

The consultation period closed on September 26 – and Cable’s department is expected to issue final regulations in the Spring.

A previous Lab project resulted in the ‘A single figure for remuneration’ report published in June.

The FRC says the responses to the latest consultation “highlighted some of the challenges” of the new proposed requirements.

“Companies need sufficient flexibility to report in a manner which is meaningful to their individual circumstances but the regulations must provide for some degree of consistency in reporting,” it says.

The FRC would like the involvement of each company to be supported by its Remuneration Committee – “given the sensitivity” around pay reporting.

Contact: email or phone Sue Harding (020 7492 2442).