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What is a key requirement for boards according to the Corporate Governance Code?
What is expected from companies regarding stakeholder engagement moving forward?
Which of the following is NOT an option for engaging with employees as per the Corporate Governance Code?
According to the content, how does effective stakeholder management affect a company?
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Which of the following accurately describes the impact of the COVID-19 pandemic on companies?
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What is one of the requirements set by the Financial Conduct Authority for listed companies?
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What is meant by 'employee voice' in the context of corporate governance?
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Why is it important for companies to identify key stakeholders?
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What is a primary benefit for premium listed companies that comply with high standards of regulation and corporate governance?
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Why do shareholders expect high-quality audits from companies?
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What is a concern regarding levels of executive pay during the pandemic?
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What should audit committees provide to ensure transparency on audit quality?
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What is one responsibility of company boards and management?
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Which principle do shareholders expect regarding executive remuneration?
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What aspect of transparency is crucial for investors relying on audit reports?
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What type of pay practices are shareholders particularly concerned about?
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What is the purpose of shareholders requiring executives to retain a portion of their shareholding for at least two years?
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What do 'malus' and 'clawback' provisions allow remuneration committees to do?
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How should companies approach remuneration during times of crisis, like the COVID-19 pandemic?
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What should remuneration committees consider when determining pay for chief executives?
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What is expected of companies in relation to Gender Pay Gap Reporting?
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How should pension contributions for executives be structured in relation to the wider workforce?
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What is a key factor to balance when determining executive remuneration during economic difficulties?
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What responsibility do remuneration committees have regarding pay ratios?
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Study Notes
Stakeholder Engagement
- Companies must report on how directors consider stakeholder interests.
- Investors expect companies to detail how their board responded to and considered stakeholder views in decision-making.
- Strong stakeholder relationships are crucial for long-term company success.
Employee Voice
- The UK Corporate Governance Code requires companies to disclose how they engage with employees.
- Companies must establish mechanisms for employee voice, such as appointing a workforce director, creating an advisory panel, or designating a non-executive director for employee engagement.
- Investors want companies to explain their chosen approach and why it's suitable for the company and employees.
Shareholder Priorities
- Shareholder confidence is essential for companies, especially after recent high-profile failures.
- Shareholders expect transparency in company decisions and accountability mechanisms to prevent executives from profiting from poor performance or short-term gains.
Transparency on Audit Quality
- Investors expect audit committees to disclose steps taken to ensure a high-quality audit.
- Audit committees should explain their rationale for choosing specific auditors and how these auditors can provide a higher quality audit.
- Committees are responsible for confirming the auditor's delivery of a high-quality audit, including questioning information and exercising professional skepticism.
Pay for Performance
- Shareholders are concerned about executive compensation not reflecting company performance.
- Companies paying executives bonuses while receiving taxpayer support or profiting from COVID-19 are under scrutiny.
- Shareholders expect executive compensation to be aligned with the broader community's experience of the pandemic and to reflect sustainable long-term value creation.
- Executive pay should be linked to long-term company health, and executives should retain a portion of their shareholding for at least two years.
- Remuneration policies should allow for bonus withholding (malus) and recovery of already paid sums (clawback) when performance or conduct warrants it.
Executive Pay During COVID-19
- Shareholders expect remuneration committees to consider the individual circumstances of each company, particularly the impact on stakeholders, when determining executive compensation.
- Companies must balance incentivizing executive performance with ensuring compensation aligns with shareholders, employees, and other stakeholders, especially during challenging times.
- While Gender Pay Gap reporting was suspended in 2020, it remains important to investors, and they expect companies to address pay disparities and outline plans for closing the gap.
Explaining Pay for All Employees
- Investors expect companies to consider their broader workforce remuneration policies and pandemic impact when deciding executive pay.
- Shareholders require comprehensive explanations for workforce pay reporting, including gender pay gaps and executive-to-employee pay ratios, and how companies intend to improve them.
Pension Contributions
- Executive pension contributions should align with those of the majority of the workforce.
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Description
This quiz explores the critical aspects of stakeholder engagement, employee voice, and shareholder priorities as outlined in the UK Corporate Governance Code. Test your understanding of how companies interact with stakeholders and ensure accountability in their decision-making processes.