Investment Association investigates executive pay

The Investment Association will investigate the structure of executive pay, saying it is often too complex and lacks incentives for managers.

The industry body has formed a working group on the topic of remuneration in a bid to bring more simplicity to investee company pay structures. 

A number of investment industry and business figures are on the newly-formed Executive Remuneration Working Group, including Helena Morrissey, chief executive at Newton Investment Management; Nigel Wilson, group chief executive at Legal & General; David Tyler, chairman at J Sainsbury; and Daniel Godfrey, chief executive at the Investment Association.

“Complex pay structures can make it difficult for investors and the wider community to judge whether high rewards are being earned for exceptional management performance or mediocre performance flattered by favourable external factors. This is an increasing source of reputational damage to business and of concern to investment managers,” says Godfrey.

“Simplification will help our members in their engagement with companies with the objective of supporting strategies and incentives that lead to long term, sustainable wealth creation for the benefit of our clients, the companies themselves and the economy.”

The first proposals are expected to come from the working group in spring 2016.