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Ending long term incentive plans—exploring the April 2017 BEIS Committee report

Published on: 18 April 2017
Published by: LexisPSL
  • Ending long term incentive plans—exploring the April 2017 BEIS Committee report
  • Original news
  • What is the background behind this report?
  • What are the most controversial recommendations made?
  • Do you think that recommendations such as the chair of a remuneration committee being expected to resign if their proposals do not receive the backing of 75% of voting shareholders will result in Remcos proposing much less controversial pay packages?
  • Do you feel the BEIS Committee’s rejection of the annual binding vote on pay but call for the requirement for a binding vote on executive pay awards, held in the following year, in the event of there being a vote against such a vote of over 25% of votes cast is a fair and workable compromise?
  • The report concludes that LTIPs should be phased out as soon as possible. No new LTIPs should be agreed from the start of 2018 and existing agreements should not be renewed. The report instead recommends deferred stock options—do you feel these will be a more effective alternative?
  • What are the potential issues and pitfalls of employee representation on remuneration committees?

Article summary

Share Incentives analysis: Following recent concern about the lack of public faith in corporate governance, the Business, Energy and Industrial Strategy (BEIS) Committee’s latest report has called for quoted companies to simplify the structure of executive pay and put an end to long-term incentive plans (LTIPs). Nicholas Stretch, partner at CMS examines the report in more detail, focusing on its key recommendations and the implications and pitfalls of some of its proposals. or take a trial to read the full analysis.

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