The Financial Reporting Lab of the Financial Reporting Council is seeking help from listed companies to develop example formats of proposed disclosures on remuneration to help shape the new remuneration reporting regulations being introduced by the Department of Business, Innovation and Skills (BIS).
On 27 June 2012, Vince Cable, the business secretary issued a consultation on revised remuneration reporting regulations aimed at 'increasing transparency on directors' pay'. The consultation period closed on 26 September 2012 and the Department for Business (BIS) expects to issue final regulations in spring 2013.
The responses to the BIS consultation highlighted some of the challenges of these new disclosure requirements. Companies need sufficient flexibility to report in a manner which is meaningful to their individual circumstances but the regulations must provide for some degree of consistency in reporting.
The draft regulations propose a new two part remuneration report, which 'replaces rather than adds to current reporting requirements'. Two elements of the proposals, specifically the disclosure of a 'single total figure of remuneration for each director' and 'detail on variable pay that has been awarded' were the subject of a previous Lab project report, A single figure for remuneration, published on 21 June 2012.
The Financial Lab will now undertake a further short-term project to obtain views on two specific disclosure requirements proposed in the consultation document that were not subject to testing as part of the first Lab project, namely:
- Scenarios for what directors will get paid for performance that is above, on and below target; and
- Chart comparing company performance and CEO pay, with company performance measured using Total Shareholder Return (TSR)
