Forcing banks to disclose remuneration details of top earners is part of a package of reforms recommended in the final report of Sir David Walker’s review into corporate governance.
Forcing banks to disclose remuneration details of top earners is part of a package of reforms recommended in the final report of Sir David Walker’s review into corporate governance.
The report, published last week, recommended that companies establish risk committees and remuneration committees to risk-assess relevant remuneration policies, that non-executive directors play a greater role in governance, and that directors and ‘high end’ earners acquire shares with an equal value to their annual remuneration.
Mathew Rutter, partner at national commercial law firm Beachcroft LLP, says: “Sir David’s recommendations will require a big cultural change in many boardrooms, and a change in the role of the chairman and non-executive director in particular. Although the focus is on banks, the review says that many of the recommendations are at least partially applicable to other financial institutions, such as life insurers. All FSA regulated firms should therefore be looking at these recommendations and thinking about how they should apply the principles proportionately to their business.”
Sue Ashtiany, head of employment at Nabarro, says: “The final recommendations of the Walker review are strong on enhanced responsibilities for non executive directors, and there is a potentially hugely enlarged remit for those who sit on remuneration committees.
“The premise that remuneration committees will be able to create effective oversight presupposes that there are transparent answers to the issues that currently grip the public imagination. Remuneration policies have complex consequences, which are not always apparent at first review.”
