It has been asked by BIS to obtain views from the corporate and investment community of two particular aspects of the disclosures that will form part of the department’s revised regulations on remuneration reporting. These are: the scenarios for what directors will get paid for performance that is above, on and below target; and a chart comparing company performance and CEO pay, with company performance measured using total shareholder return.

According to the Lab, which is part of the Financial Reporting Council, responses to the BIS consultation on the proposed regulations highlighted some of the challenges posed by the 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,” it said.

The Lab would like listed companies to develop example formats of the BIS disclosures, which it will test with the investment community. It will then produce a report setting out example disclosures with an assessment of their usefulness to the investment community as well as the issues companies experienced when preparing them.

Given the sensitivity of reporting in this area, participants in the project – which will run over the next three months – will be bound by confidentiality. The Lab suggests that the companies involved would need to have the support of their remuneration committees and in particular, the chair.

Companies interested in joining the project should email FinancialReportingLab@frc.org.uk or telephone Sue Harding on +44 (0)20 7492 2442.

BIS is currently considering the responses to the consultation and is expected to issue final regulations in spring 2013.

Julia Irvine

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