IA guidance on the impact of COVID-19

The Investment Association (IA) have this week published shareholder expectations on how Remuneration Committees of UK listed companies and their advisors should be reflecting the impact of COVID-19 on executive pay.

A common concern from companies and shareholders is the ability to set meaningful three-year LTIP targets at the current time and questions over the appropriate grant size given the share price reaction to COVID-19. The main options being to:

1)    Grant on the normal timeline setting performance conditions and grant size at the current time.

2)    Grant on the normal timeline setting the grant size now but committing to set performance conditions within the next 6 months.

3)    Postpone the current LTIP grant.

Whatever approach is taken to LTIP, bonus or performance conditions, Remuneration Committees will
need to be prepared to exercise appropriate discretion to ensure the outcomes reflect company and executive performance, as well as the experience of shareholders and stakeholders including employees The full report can be found at https://bit.ly/35mD05x