ABI gives guidance on boardroom pay

The ABI has given guidance on boardroom problems such as the overpayment of executives and gender bias.

The ABI Board Effectiveness report, released today, focuses on board diversity, succession planning and board evaluation, including discussions on risk management.

The trade body has also reissued its Principles of Remuneration document to help companies to fully grasp the views of investors on boardroom performance and executive pay.

The document recommends that board should:

• Support the right reward for exceptional performance

• Strongly resist paying for failure

• Understand that excessive remuneration undermines the efficient operation of the company, affects its reputation and is not in the interest of shareholders

ABI director general Otto Thorensen said: “Effective boardrooms should be the powerhouse of the UK economy. We continue to favour evolution, building on what we have learnt from recent years to make sure companies act in shareholder’s interests and deliver long term economic growth that will benefit society as a whole.”

The ABI has been publishing guidelines on executive pay since the 1970s. The guidelines were last revised in 2006 and reissued in 2007