The Financial Reporting Council (FRC) is consulting on whether to amend the UK Corporate Governance Code to address a number of issues relating to executive remuneration following the introduction of new legislation on voting and reporting on top level pay which came into force on 1 October 2013.

The FRC will be looking at three specific proposals: clawback arrangements; whether non-executive directors who are also executive directors in other companies should sit on the remuneration committee or whether this creates a perceived conflict of interest; and what actions companies might take if they fail to obtain at least a substantial majority in support of a resolution on remuneration.

The FRC is seeking views on whether the current Code requirements covering clawback arrangements are sufficient, or whether the Code should include a 'comply or explain' presumption that companies have provisions to recover and/or withhold variable pay. The consultation also asks whether the Code should adopt the terminology of the new directors' remuneration regulations and specifically note circumstances under which payments could be recovered or withheld.

The consultation also asks whether there should be an explicit requirement in the Code to report to the market in circumstances where a company fails to obtain at least a substantial majority in support of a resolution on remuneration. If so, the consultation is seeking views on issues such as what constitutes a 'significant percentage', the time period within which companies should report on discussions with shareholders, and whether the Code should specify the means by which companies should report to the market.

FRC chairman Baroness Hogg said: 'The government's new legislation underlines the importance of boards and investors engaging on directors' remuneration. The FRC is undertaking this consultation to understand if there is a case for changes to the Code. There is no presumption on the FRC's part as to the outcome.'

ICAEW Head of Corporate Governance, Jo Iwasaki said it would be interesting to see the response of shareholders to the consultation, given the current level of public interest in top level pay.

'Best practice guidance on robust engagement has only been issued this month. Good practice takes time to evolve and guidance needs time to embed. While executive remuneration has been high in the public's awareness, it is not clear that there is appetite for further changes to the existing Code,' Iwasaki said.

Any proposed changes will be subject to consultation in the first quarter of 2014, with the new Code applying to accounting periods beginning on or after 1 October 2014.

The deadline for responses is 6 December, by e-mail to [email protected], or in writing to: Catherine Woods, Financial Reporting Council, Fifth Floor, Aldwych House, 71-91 Aldwych, London WC2B 4HN.