The Association of British Insurers (ABI) has called for executive share incentive schemes to show a clear link to performance.
Its revised guidelines, published last week, endorse the growing trend towards phased annual grants of options or shares, and towards a sliding scale of payments, depending on performance.
Mary Francis of the ABI said: “We believe that top rate remuneration should be paid only to top rate performers, while those at the bottom of the league should get no extra benefits.
“As reward levels increase, so must the performance conditions attached to them. Stretching performance conditions are good for the company, good for the shareholder value, and good for our policyholders.”
The new guidelines state that, while executives should be encouraged to build up shares, clear limits should be set and changes to existing reward schemes should be put to the shareholder vote.
The ABI works with companies prepapring new schemes. It said that last year it was consulted by 120 companies, and that it regularly effects change before the scheme is presented to shareholders.