International Conference on Modern Algebra in conjunction with the ...

Charles Cotton

Description

• cours magistral

International Conference on Modern Algebra in conjunction with the 17th annual Shanks Lectures Vanderbilt University Nashville, Tennessee, USA May 21-24, 2002

• algebras over an infinite field
• generated variety of groups
• categorical equivalence of algebras with majority term
• hilbert series
• finite varieties
• universal algebra
• model theory
• p.
• algebras
• problem

Sujets

• Cours magistral
• Ural State University

Informations

• Publié par: udwi
• Nombre de lectures: 12
• Langue: English

Extrait

Executive remuneration: Discussion paper Submission to the Department for Business, Innovation and Skills Chartered Institute of Personnel and Development (CIPD) November 2011

Background 1. The CIPD is the leading independent voice on workplace performance and skills. Our primary purpose is to improve the standard of people management and development across the economy and help our individual members do a better

job for themselves and their organisations. 2. Public policy at the CIPD exists to inform and shape debate, government policy and legislation in order to enable higher performance at work and better pathways into work for those seeking employment. Our views are informed by

evidence from 135,000 members responsible for the recruitment, management and development of a large proportion of the UK workforce. 3. Our membership base is wide, with 60% of our members working in private sector services and manufacturing, 33% working in the public sector and 7% in the notforprofit sector. In addition, 76% of the FTSE 100 companies have CIPD members at director level. We draw on our extensive research and the expertise and experience of our members on the frontline to highlight and promote new and best practice and produce practical guidance for the benefit of employers, employees and policy makers.

4. In creating our response, we consulted with some of our senior members in our Reward Forum, who have experience of remuneration, including executive remuneration, in a professional context.

General comments

5. The CIPD is unsure as to what this discussion paper is trying to solve. Is it to align pay and performance? If so, it is a lot easier to say than do in terms of defining, measuring and ascribing success. It will also differ by company and sector; in certain sectors, the timescale between effort and success can be long, as in the insurance or pharmaceuticals sectors. Similarly, it can be just as hard to

define, measure and ascribe failure.

6. If the aim of the paper is to reduce the gap between the rich and the poor (however defined) the focus should be on what can be done to increase the

earning potential of the lower and moderately paid (such as improving skills),

rather than focus on reducing the compensation of the highly paid.

7. The CIPD is also concerned about the unintended consequences of any reform of directors’pay. For instance, over time, executives have been required to hold more of their personal wealth in company shares, yet movements in the stock market can easily inflate the value of these holdings.

8. There is a potential danger that the increased scrutiny of reward packages could encourage some individuals with the necessarily talents to look for careers outside the publicallyowned sector where they can earn more under less scrutiny.

9. In addition to performance, boardroom pay is linked to a number of factors (such as span of control, international responsibilities, sector), and these may outweigh the performance weighting.

10. However, the CIPD does have some concerns with existing pay practices. One issue concerns who executive directors compare themselves to for pay purposes. Some see themselves as entrepreneurs and wish to pay be paid as such. Yet not all firms will want entrepreneurs and in certain circumstances this could be

counterproductive. Remuneration Committees (or RemCos) must be clear when establishing pay benchmarks that only roles relevant to its circumstances are used.

We will now address individual questions that are of relevance to the CIPD. The role of shareholders Question 1:Would a binding vote on remuneration improve shareholders’ ability

to hold companies to account on pay and performance? If so, how could this work

in practice?

11. No. There is evidence to indicate that the existing advisory vote is already having

an influence on boardroom pay, as is pressure from the Government, unions,

media, the public and institutional investors.

12. Institutional shareholders may prefer to put pressure on the board in private rather than in public, especially when the associated publicity could, potentially, impact negatively on the value of the company.

13. The countries cited in the discussion paper where there is a binding vote have

different legal systems and traditions of shareholder involvement, so it would not

be easy to do the same in the UK.

14. To work in practice, c are would need to be given to the drafting of the statement/question that was being voted on by shareholders. Thought would also need to be given to the size of turnout and majority that would be required, as well as what could be done to encourage shareholders to be more engaged in

the issue of executive remuneration. Furthermore, attention would need to be

given to the minimum length of time a share needed to be held before the holder

could vote on executive remuneration.

Question 2: Are there any further measures that could be taken to prevent

payments for failure?

15. The CIPD believes that the RemCo should focus as much attention on what will happen to the reward package if success isnotachieved as to what will happen to it if success is achieved.

16. There are a variety of reasons for nonsuccess as well as degrees of non

success, so these, as well as their possible consequences, should be explored

before pay and performance targets are set. Sometimes it may be appropriate to

let a failed executive go with dignity.

17. There should be greater transparency and simplicity of design over the value of

all of the elements of the package due on termination to help the RemCo

determine whether the package is commensurate. Firms should also examine

whether it is appropriate to have shorter notice periods.

18. The CIPD believes that the Government should explore whether ois feasible to defer severance packages over a longer time frame it oof the redundancy package should be in company shares that some have to be held for a minimum number of years.

Question 3: What would be the advantages and disadvantages of requiring

companies to include shareholder representatives on nominations committees?

19. The CIPD believes the disadvantages to include the following: o NEDs already sit on the NomCo, so we are not sure what these representatives would add oare not convinced that all shareholders would want to exercise this We responsibility, or have the resources to do so, as they have delegated management responsibility to executive and nonexecutive directors

o

o

o

There are a variety of reasons for share ownership and it would be

challenging to reflect all of these on the NomCo

As shareholder representatives would only be sitting on the NomCo

they would not have the full access to other sources of information that

would allow them to contribute effectively

As they would not be a full director, they would not have the full legal

responsibilities that executive directors do.

20. The CIPD recommends that the NomCo take a broader approach to talent

management and development so that they have a ready supply of key talent,

which they can turn to when vacancies appear, rather than paying inflated wages

through the open market.

The role of remuneration committees

Question 4: Would there be benefits of having independent remuneration

committee members with a more diverse range of professional backgrounds, and

what would be the risks and practical implications of any such measures?

21. The CIPD can identify the following risk; that independent members will not have

full access to other relevant information as they are not part of the board.

22. Rather than focusing on independent remuneration committee members, the

CIPD believes that the focus should be on NEDs and what can be done to ensure that there are sufficient numbers of independentlyminded people. The board needs to explore what attitudes, values, and skills are required for resilience and agility, and how these can be acquired through a variety of channels, such as through the professions.

23. The Government should review the commitments on NEDs to ensure that they

are not inhibiting those with the right skill set from coming forward, resulting in a depleted pool of talent from which to draw. The Government could also examine the feasibility of creating a central pool of potential licensedNED candidates for FTSE firms from different backgrounds.

Question 5: Is there a need for stronger guidance on membership of remuneration

committees, to prevent conflict of interest issues from arising?

24. You either have guidance or you do not. The focus should be on the quality of the discussions rather than on the membership.

Question 6: Would there be benefits of requiring companies to include employee

representatives on remunerations committees and what would be the risks and

practical implications of any such measures?

25. There are risks that employee representatives will: o Use the role for personal or political ends obe able add anything meaningful as they are not part of wider Not board discussions and do not have the appropriate skill set o‘Go native’ and identify with their fellow directors rather than the

employees that they are supposed to represent

26. There would also be issues of how to select representatives and decide what

training and how much they would need.

27. Employee representatives may work in a German context, but that country has a

different approach to corporate governance in addition to a different cultural and legal framework. For it to work in the UK we would need a different approach to corporate governance and a rebalancing of the rights of various stakeholders, including shareholders.

Question 7: What would be the costs and benefits of an employee vote on

remuneration proposals?

28. The CIPD is concerned that: ovote may become a proxy vote on other aspects of leadership The and workforce management

o o

o

Pay is emotive and so the vote could get hijacked

If executive pay is going to be subject to an annual vote, there could

be pressure for employee votes on other aspects of corporate life,

such as expenses

Thought would need to be given to who would be eligible to vote, whether there would need to be a minimum turnout, the majority required to approve//not approve, who would carry out the vote and when and where.

29. The CIPD believes that there is nothing to stop RemCos from examining

employee perspectives on executive pay. They can do this by requesting

companywide pay data and the findings from employee engagement surveys,

which can contain attitudes to pay, including executive pay.

Question 8: Will an increase in transparency over the use of remuneration

consultants help to prevent conflict of interest or is there a need for stronger

guidance or regulation in this area?

30. The CIPD suggests that the RemCo, as part of the annual report, should sign a document saying that in its opinion there is no conflict of interest. If there is a conflict of interest then an explanation should be given as to why it exists and what procedures are in place to mitigate or manage the conflict.

The structure of remuneration

Question 9: Could the link between pay and performance be strengthened by

companies choosing more appropriate measures of performance?

31. Yes, but it is often hard to define, measure and ascribe performance, let alone

link pay to it, so there are no silver bullets or onesizefitsall solution. Employers

need to examine a number of performance measures and select the most

appropriate.

32. When an executive is being is being appointed it can be challenging determining

an appropriate remuneration package as this is based on potential, rather than on

performance. In such instances, it is important when determining a reward

package for employers to judge how much of an individual’s success is down to

them and how much is down to them working for a successful company.

Question 10: Should companies be encouraged to defer a larger proportion of pay

over more than three years?

33. Yes. If firms believe that it is appropriate, then the CIPD believes that companies

should be encouraged to defer a larger proportion of pay over more than three

years. It may be more straightforward and transparent to defer pay over time

rather than come up with increasingly more complex ways of linking pay to

performance that directors, shareholder, regulators and the public have difficulty

in understanding.

34. If the Government wished to legislate in this area, the CIPD suggests it

investigates the feasibility of creating a taxadvantaged deferred share/bonus

plan. Under such an arrangement, the Government could insist on certain criteria that would have to be met before the tax advantages kick in. This could also go some way to levelling the playing field with unlisted companies where pay is subject to capital gains tax rather than income tax.

Question 11: Should companies be encouraged to reduce the frequency with

which longterm incentive plans and other elements of remuneration are

reviewed? What would be the benefits and challenges of doing this?

35. No. Boards review all aspects of the business at least once a year, so the CIPD

is not sure why executive pay should be any different. Given the rapidly changing environments most firms now face, it seems odd that they would be encouraged not to reflect on executive pay more frequently than at 12month intervals.

36. There is also a huge difference between reviewing something and then taking action. The emphasis should not be on the frequency of the review but the quality and transparency of the decision.

Question 12: Would radically simpler models of remuneration which rely on a directors’ level of share ownership to incentivise them to boost share value, more effectively align directors with the interests of shareholders?

37. Possibly. The existing pressure to link pay to performance has led to complex

models of remuneration and is increasing the cost of pay delivery. For instance,

directors may discount their LTIPs as they perceive that it is unlikely that they will

actually pay out.

38. We would support employers exploring the feasibility and desirability of requiring

directors to hold more of their wealth in company shares and to hold these shares

for longer.

Question 13: Are there other ways in which remuneration  including bonuses,

LTIPs, share options and pensions–could be simplified?

39. The CIPD believes that the reporting of remuneration could be simplified, so shareholders know what the cost/value is of certain benefits, especially Defined Benefit pensions.

Question 14: Should all UK quoted companies be required to put in place claw

back mechanisms?

40.Yes, though it rather depends on what is actually meant by ‘clawback.’The CIPD

believes that the initial focus should be on managing underperformance

(depending on the various reasons) before an award has been made. Where

performance cycles are longer than a year awards should be deferred over time

and adjusted according to outcome.

41. If an award has been given on misrepresented figures then there is recourse through the courts.The CIPD’s fear is that clawback mechanisms will add another layer of complexity with lawyers and remuneration experts drafting the rules and then dealing with its application if performance is lower than expected.

Promoting good practice

Question 15: What is the best way of coordinating research on executive pay,

highlighting emerging practice and maintaining a focus on the provision of

accurate information on these issues?

42. CIPD suggests that one option could be to create an independent pay review

body to examine trends and developments around executive reward. A model

could be based on existing independent pay review bodies that make

recommendations on public sector pay. This body could collect, interpret and

then disseminate research information to RemCos.