COVID-19: UK IA letter on expectations & support

8 April 2020

The Investment Association (IA) has sent a letter addressed to FTSE 350 companies expressing support from investment managers for British businesses in the face of the COVID-19 pandemic, and setting out what the IA expects to see in certain key areas, including executive remuneration.


  • The IA restates its goal of delivering long-term value and security for investors, and despite the current crisis, wants companies to ensure they are thinking long-term too. For remuneration, this means the IA favours companies that reflect cancelled dividend payments and/or changes to workforce pay in their approach to executive pay - as set out in the IA Principles of Remuneration which require pay to be linked to performance and shareholder experience.

Other points

  • Engagement and communication - shareholders will support a focus on the most business-critical issues, so companies can focus on building a long-term sustainable future.
  • AGMs - again, shareholders will focus on key material issues affecting businesses, as well as encouraging flexibility to ensure AGMs can go ahead while respecting ‘Stay at Home’ measures.
  • Dividends - the IA recognises that there is no one size fits all approach here, and the most important thing is that companies act transparently and in the interests of their own sustainability - although where dividend payments are cancelled they should be resumed as soon as possible.
  • Financial reporting - as we recently reported on in a newsletter which can be found here, the IA welcomes the additional time the UK Financial Conduct Authority has given to companies to prepare their results and reports.
  • Additional capital - shareholders will look to support companies seeking additional capital where possible.

Tapestry comment
Many companies have already been looking at their own remuneration arrangements for their executives ahead of the IA’s guidance this week and other institutional investors’ letters to companies in the last few days. The arrangements we are seeing being considered include salary reductions, bonus waivers, arrangements which look to defer salary or settle in shares to conserve cash and align with shareholders, and changes to their share plans.

We will be holding a webinar on these alternative arrangements and will send out invitations next week.

It is helpful that the IA are supporting the alternative AGM arrangements being proposed. Many companies have their Remuneration Polices up for renewal this year and as well as other complications of AGMs not happening when they were due to happen, this facilitates the AGM business being done in a timely way.

If you would like to discuss the implications of this letter, or of COVID-19 on your incentives more generally, please do let us know.

Janet Cooper OBE

Janet Cooper

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