Investors want company rationales for executive pay structures to be more company-specific, but do not want the overall approach behind the Investment Association’s (IA) revised principles to be changed, the UK asset manager body has said.
The IA today said it “reconfirmed its flexible approach to executive payment” for the 2026 proxy voting year, as the market had responded positively to its revised Principles of Remuneration over the course of this year.
The Principles, which outline IA member views on the commonly accepted approach to executive pay for the majority of companies, were updated last year to offer greater flexibility to companies to adapt pay structures when accompanied with suitable explanation.
The IA said that companies had welcomed the flexibility “to pay appropriate remuneration in order to attract, retain and motivate talent whilst meeting shareholder expectations”.
However, there were also “a small number of areas where investors feel the implementation of the new Principles can be further improved, without changing the overall approach,” it said.
In addition to companies’ rationales, the other areas where companies needed to improve are benchmarking, hybrid schemes, bonus deferral, and in-flight awards, according to the IA.
“The continuity in approach in the Principles demonstrates the robust and future-looking nature of last year’s changes to offer companies greater flexibility to adapt executive pay to best meet their business structures,” said Andrew Ninian, director of stewardship, risk and tax at the trade body.
“As we prepare for the 2026 AGM season, investors will continue to expect remuneration committees to demonstrate a strong link between pay and performance and for firms to provide company-specific rationale for their chosen approach to remuneration.”
The IA also said that the approach to non-executive director remuneration set out in the Principles remains unchanged.
The latest digital edition of IPE’s magazine is now available
