LGIM's Principles of Executive Pay for the 2024 AGM season

Legal and General Investment Management (LGIM) has updated its UK Principles of Executive Pay for the 2024 AGM season. Key updates include:

 ·         There is now acknowledgement that both performance-based and time based share awards may be appropriate for some companies. There should however be a strong rationale for this which may include it being necessary companies with executives in the US, or those recruiting and competing for talent in the US.

 ·         Salary increases for executives are expected to be lower than that for the wider workforce.

 ·         Moving away from a previous expectation that at least one-third of the bonus should be paid in shares, there is now provision for a lower rate of deferral if the executive already holds a large number of shares and there are malus and clawback provisions evident.  

 ·         Shareholding guidelines are slightly reduced at 2x salary versus 3x previously for those companies operating restricted shares. However, it remains unchanged for those companies with performance shares.

 ·         Performance metrics should be a mix of internal, absolute and relative targets although the use of absolute TSR or share price targets is ‘not preferable’ as they can be impacted by factors outside management control.

 More information may be found at 2023_UK Executive Pay Principles Master clean Final.pdf (lgim.com)