Corporate Governance Code increases reporting on remuneration practices

Portsmouth Business School building

The research assessed a sample of FTSE 350 companies to determine the extent to which they have applied requirements set by the updated UK Corporate Governance Code in 2020.

  • 12 May 2021
  • 2 min read

• FTSE 350 companies are disclosing more information on remuneration
• A majority of companies report linking individual rewards to strategy and long-term performance
• However, there remains a lack of detail on the application of the Code principles and provisions

Companies are better aligning their Board remuneration policy and practices with long-term shareholder interests according to new research conducted by the Financial Reporting Council (FRC) and the University of Portsmouth. This research assessed a sample of FTSE 350 companies to determine the extent to which they have applied requirements set by the updated UK Corporate Governance Code in 2020.

The FRC is pleased that the findings support those from the Review of Corporate Governance Reporting published in November 2020. Overall, the report showed that the Code requirements on directors’ remuneration have had a positive impact on reporting. However, many company reports lacked detail and outcomes so whilst companies are giving more information there is still a danger of boilerplate disclosures.

The research fits with our specialisms in corporate governance, accounting and accountability, investigating the behaviours, actions and responses of both providers and users of accounting information and in so doing improving standards across the accounting and financial management field and stimulating debate within it.

Dr Karen McBride, Reader in Accounting and Financial Management

The team at the University of Portsmouth, led by Dr Karen McBride, were commissioned by the FRC to look at the changes in corporate reporting around director’s remuneration following their new Corporate Governance Code.

Dr McBride said: “The research fits with our research specialisms in corporate governance, accounting and accountability, investigating the behaviours, actions and responses of both providers and users of accounting information and in so doing improving standards across the accounting and financial management field, and stimulating debate within it.”

The report is part of a series of research commission by FRC to support future policy and improve guidance for companies when reporting against the UK Corporate Governance Code.

Board remuneration policy and practices report

New research conducted by the Financial Reporting Council (FRC) and the University of Portsmouth has found that FTSE 350 companies are better aligning their Board remuneration policy and practices with long-term shareholder interests.

David Styles from the FRC interviews Dr Karen McBride and Dr Ahmed Aboud from the University of Portsmouth about their research that can support future policy and improve guidance for companies when reporting against the UK Corporate Governance Code.

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