The Association of British Insurers (“ABI”) has published its first Report on Board Effectiveness, following the publication of its Guidance on Board Effectiveness in March this year. It has also issued a revised version of its Principles of Executive Remuneration.
The Report on Board Effectiveness focuses on three key issues:
- Board diversity – including women in the boardroom;
- Succession planning – board engagement in planning for succession for all senior management; and
- Board evaluation – including discussions on risk management, corporate strategy and geographic markets of operation and reporting.
It also highlights existing best practice amongst FTSE 350 companies and makes clear that greater progress and transparency is needed on these issues to ensure an effective board and a successful company.
The revised Principles of Remuneration address investor concern over executive pay. ABI members believe that non-executive directors have a key role to play in determining appropriate remuneration and that shareholders should be actively involved, but without micromanaging companies.
Importantly, the Principles make clear that company boards should:
- support appropriate reward for exceptional performance;
- strongly resist any payment for failure;
- understand that excessive or undeserved remuneration undermines the company’s efficient operation, adversely affects its reputation and is not aligned with shareholder interests; and
- not engage in crude benchmarking when seeking to justify pay increases.
For a copy of the report on Board Effectiveness please visit http://www.ivis.co.uk/ExecutiveRemuneration.aspx