Investment Association pressures FTSE bosses on pay ratios

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The Investment Association has called for pay-ratio disclosure in an open letter to FTSE 350 bosses outlining its expectations on executive pay.

Sent out today, the letter argues pay ratios between the chief executive and median employee and chief executive and the executive team should be disclosed so that investors can understand the scale of the awards given.

The recommendations came as the IA updates its Principles of Remuneration following an industry-led independent working group focussed specifically on executive remuneration.

In a press release accompanying the letter, its author, Andrew Ninian, director of corporate governance and engagement, says it was important for the IA to update its principles to “ensure that we are not only acting as responsible stewards for our clients but also show that we are aligned with the current climate”.

“Issues surrounding executive pay are a growing concern for investors, politicians and society as a whole.”

It argued no single remuneration structure should be recommended over others and instead companies should choose the appropriate structure and strategy for their business.

The updated principles also argue boards should provide clear justification around executive levels of pay.

Ninian says: “The increasing complexity of remuneration structures has been the driving force behind these issues and our new principles are designed to offer a market-based solution to add simplicity and flexibility.

“It is vital that companies have the opportunity to choose the right structure for their business and this must be done in close partnership with their shareholders.