\n| Fixed Pay<\/th>\n | \u2022 Increases should be supported by robust benchmarking. Generic justifications and market practice are insufficient<\/p>\n \u2022 Explanation is expected when a new director is recruited at a higher salary than the incumbent, and any subsequent increases should be gradual<\/td>\n | \u2022 Increases should ideally be below the workforce rate<\/p>\n \u2022 \u201cCatch-up\u201d and benchmarking-related increases are generally not supported<\/p>\n \u2022 Roadmap for expected increases for new joiners should be disclosed on appointment<\/td>\n | \u2022 Increases should be appropriate when compared to the workforce<\/p>\n \u2022 Rationale for exceptional increases should be fully disclosed<\/td>\n | \u2022 Increases should generally be below workforce. Benchmarking should be used sparingly<\/p>\n \u2022 Pay for new joiners should be set cautiously and increased gradually if justified<\/p>\n \u2022 Pensions should be aligned with the workforce. For pay structures modelled to the US, the differing practices of pension contributions of the local market should be considered<\/td>\n | \u2022 Increases should be reasonable, well justified, and supported by a clear rationale and benchmarking<\/td>\n | \u2022 Increases should be in line with the workforce rate<\/p>\n \u2022 Significant increases should be supported by a strong rationale<\/p>\n \u2022 Benchmarking should be used transparently, and details, including peer groups, should be disclosed<\/td>\n | \u2022 Unsupportive when the proposed level of pay increase is excessive or inappropriate<\/td>\n | \u2022 Increases should be clearly justified and normally below the workforce rate<\/p>\n \u2022 Pay packages for new joiners should generally be lower than those of their predecessors<\/td>\n<\/tr>\n <\/p>\n |
\n| Annual Bonus<\/th>\n | \u2022 Bonus deferral may be reduced once shareholding guidelines are met, but full removal is discouraged<\/td>\n | \u2022 Target payouts should not exceed 50% of maximum<\/p>\n \u2022 Deferral is encouraged, especially when there is no LTIP in place<\/td>\n | \u2022 Deferral is expected but can be reduced when shareholding guidelines are met, provided awards remain subject to clawback and malus provisions<\/td>\n | \u2022 Deferral into shares of one-third or more of bonus earned is encouraged<\/p>\n \u2022 May allow for a smaller portion of a bonus to be deferred where directors have substantial shareholdings and mechanisms are in place to allow for clawback<\/p>\n \u2022 Increases in opportunity are discouraged. Opportunity of 250% of salary is generally reserved for the largest global companies<\/td>\n | \u2022 Annual bonus that accounts for the majority of variable pay without a compelling rationale will not be supported<\/td>\n | <\/td>\n | \u2022 Target payouts should not exceed 50% of maximum<\/p>\n \u2022 Deferral is encouraged even once shareholding guidelines are met<\/td>\n | <\/td>\n<\/tr>\n <\/p>\n |
\n| Long-Term Incentive Plan (LTIP)<\/th>\n | \u2022 An appropriate discount and performance underpins are expected to apply to restricted share awards<\/p>\n \u2022 Hybrids are only supported in limited circumstances (significant US footprint, competing for global talent)<\/p>\n \u2022 Value Creation Plans (VCPs) pose challenges and risks, and should be supported by a compelling rationale and thorough assessment of the alternatives<\/p>\n \u2022 LTIP opportunities should be reduced after significant share price falls, and vesting outcomes should be assessed against windfall gains and reduced if appropriate<\/td>\n | \u2022 Hybrids should be supported by a strong rationale instead of generic references to issues such as competitiveness. Discount is expected to reflect greater certainty<\/p>\n \u2022 LTIP awards should be reduced to account for a material fall in share price<\/td>\n | \u2022 An appropriate discount and performance underpins are expected to apply to restricted share awards<\/p>\n \u2022 Hybrids are considered on a case-by-case basis, taking into account the specific rationale and whether there has been a reduction in opportunities vs the previous LTIP. When competing for talent in the US is cited as part of the rationale, relevant peers should be disclosed<\/td>\n | \u2022 Discount of at least 50% should apply to restricted share awards<\/p>\n \u2022 Hybrids may be supported if there is a strong, company-specific justification (e.g. US market alignment)<\/p>\n \u2022 Grants should be reduced after a significant share price fall (>20%), or awards should be reduced on vesting<\/td>\n | \u2022 Majority of pay should be delivered through LTIP<\/p>\n \u2022 One-off awards should only be granted in exceptional circumstances<\/td>\n | \u2022 Discount of at least 50% should apply to restricted share awards. Performance underpins should also apply<\/p>\n \u2022 Hybrids are considered on a case-by-case basis. Companies should provide a clear explanation as to how the plan supports long-term value creation and aligns with strategy. If the move to a hybrid is accompanied by a material increase in overall quantum, companies should provide a compelling explanation<\/p>\n \u2022 One-off awards should only be granted in exceptional circumstances<\/td>\n | \u2022 Incentives which have no performance conditions, or where an insufficient portion is tied to performance conditions, are opposed<\/p>\n \u2022 VCPs and uncapped plans are generally not supported<\/td>\n | \u2022 Supportive of companies departing from traditional LTIP arrangements, provided they can clearly demonstrate why the change is in shareholder interests<\/p>\n \u2022 Yet to be convinced that hybrids are aligned with shareholder interests, given the win-win scenario for executives<\/p>\n \u2022 LTIP awards should be reduced after share price falls<\/td>\n<\/tr>\n <\/p>\n |
\n| Performance Metrics<\/th>\n | \u2022 Metrics and targets should be clearly linked to the KPIs used and accompanied by how they relate to value creation<\/p>\n \u2022 Adjustments to in-flight metrics and targets should be clearly justified and only apply in exceptional circumstances<\/td>\n | \u2022 Targets should be disclosed in detail, preferably with full target range<\/p>\n \u2022 Lowering of targets should be reflected in opportunity reduction, and any increase in award size should be linked to more challenging targets<\/td>\n | \u2022 Preference for majority of performance assessment to be based on financial measures<\/td>\n | \u2022 Metrics should be clearly defined, measurable, and aligned to strategy, avoiding double-dipping across schemes<\/p>\n \u2022 Targets should be primarily financial, combined with meaningful non-financial measures<\/p>\n \u2022 Lowering targets without a strong justification should be avoided<\/p>\n \u2022 ESG targets should apply where companies are exposed to high risks in those areas<\/td>\n | \u2022 Rigorous metrics such as relative TSR should apply<\/p>\n \u2022 Non-financial metrics, including ESG, should be equally rigorous, aligned to strategy, and clearly disclosed<\/td>\n | \u2022 Supportive of input metrics and metrics related to financial value creation (for example, economic profit, ROIC)<\/p>\n \u2022 Wary of companies that rely solely on output metrics such as EPS or TSR. If TSR is used, it should be assessed on a relative basis<\/p>\n \u2022 Any sustainability metrics should be as rigorous as financial and operational measures<\/td>\n | \u2022 Incentives should be based on financial metrics that are realistic but ambitious, appropriate to strategy, and aligned with shareholder expectations<\/td>\n | \u2022 TSR is a preferable metric for LTIPs<\/p>\n \u2022 Variable pay should include robust and relevant ESG metrics when these are strategically material<\/td>\n<\/tr>\n <\/p>\n |
\n| Shareholding Guidelines<\/th>\n | \u2022 Guidelines should clearly state the minimum requirement and the time to achieve it, as well as the consequences of not doing so<\/p>\n \u2022 Post-employment guidelines should be enforceable and apply for 2 years post-exit<\/td>\n | \u2022 Requirement should be at least 200% of salary, with an appropriate post-employment shareholding requirement in place for at least 2 years<\/td>\n | \u2022 Minimum shareholding requirements should apply in- and typically two years post-employment<\/td>\n | \u2022 Minimum requirement should be equal to annual LTIP awards or 2x face value of restricted share awards<\/p>\n \u2022 Post-employment requirement should be no less than 80% of in-employment requirement<\/td>\n | \u2022 Absence of shareholding guidelines or requirements out of line with peers is not supported<\/td>\n | \u2022 Meaningful shareholding should be built within a reasonable time, and preferably apply for 2 years post-employment<\/td>\n | \u2022 Meaningful level of share ownership should be built within a reasonable timeframe<\/p>\n \u2022 Post-employment requirement is expected in some markets<\/td>\n | \u2022 Meaningful in-service and post-employment shareholdings are expected<\/td>\n<\/tr>\n <\/p>\n |
\n| Malus and Clawback<\/th>\n | \u2022 Triggers should be clearly disclosed<\/td>\n | \u2022 Triggers should be clearly disclosed<\/td>\n | \u2022 Circumstances, timing and any actual application of the provisions should be clearly disclosed<\/td>\n | \u2022 Triggers should be clearly disclosed and not too narrowly defined<\/td>\n | \u2022 Provisions should be detailed in incentive plans and exercised when necessary<\/td>\n | \u2022 Provisions should be built into incentive plans<\/p>\n \u2022 Appropriate triggers should be considered in the context of the company<\/td>\n | <\/td>\n | \u2022 Triggers should be clearly disclosed<\/td>\n<\/tr>\n <\/p>\n |
\n| Discretion<\/th>\n | \u2022 Discretion should be applied in a balanced and consistent manner (both positive and negative discretion)<\/p>\n \u2022 Companies are encouraged to consult with shareholders, especially in cases where discretion may have a material impact on outcomes<\/p>\n \u2022 The effectiveness and appropriateness of the discretion framework should be regularly reviewed<\/td>\n | \u2022 Any use of discretion should be clearly explained<\/p>\n \u2022 Adjusted targets should not be any less challenging than the original targets set<\/p>\n \u2022 Disclosure is expected on how ESG matters were considered when determining outcomes<\/td>\n | \u2022 Scope and use of any discretion should be clearly disclosed and justified<\/p>\n \u2022 Incentive outcomes should account for material events that would otherwise be excluded from performance outcomes<\/td>\n | \u2022 Any use of discretion should be accompanied by a detailed explanation of reasons, elements of pay affected, and impact on final pay outcome<\/td>\n | \u2022 Discretion should apply when pay outcomes do not align with company and share-price performance or the shareholder experience<\/p>\n \u2022 Excessive use of discretion is viewed negatively<\/td>\n | \u2022 Clear disclosure is expected to explain how discretion was applied and how the adjustments align with performance and stakeholder experience<\/td>\n | <\/td>\n | \u2022 Discretion should ensure that pay outcomes closely reflect company and management performance, and stakeholder outcomes<\/p>\n \u2022 Scope and limits of discretion should be clearly outlined to shareholders beforehand<\/td>\n<\/tr>\n <\/p>\n |