The Investment Association has published its 2018 principles of remuneration in an open letter to the chairs of remuneration committees of FTSE 350 companies.

They introduce two new requirements for listed firms: One is that any relocation benefits should be disclosed at the time of appointment and only be paid for a limited period, while the second is that annual bonus targets should be disclosed within 12-months of payment and a portion of any bonus should be deferred if the bonus is greater than 100% of salary.

Andrew Ninian, director of stewardship and corporate governance at the Investment Association, said: ‘This year’s AGM season saw investors flex their muscles and hold big business to account.

‘A majority of FTSE 350 companies sought shareholder approval for their new pay policies and many of the UK’s top 20 companies have started to address investors’ concerns on executive pay levels.

‘We now expect this trend to be extended across the wider FTSE, with more companies showing restraint on bonuses, long-term incentives and overall executive pay levels.’

Over the coming year, the Investment Association says fund managers will be seeking greater transparency on both financial and non-financial bonus targets to ensure pay is in line with performance.

The association says its members now expect companies to disclose the pay ratios between the CEO and median or average employee as well as between the CEO and the executive team, and is looking for clarity that companies have appropriately aligned their incentive arrangements with the delivery of the company’s long term strategy.

The Investment Association letter to FTSE 350 remuneration committee chairs is here.

Report by Pat Sweet