Greater clarity on 'high-end' employees, pay bands and pay structure, says Archon
Following the publication of The Walker Report, Nick Ralph, of Archon Solicitors LLP, issued the following statement:
In relation to the Remuneration Chapter of his report, not much has changed from his draft Report from July 2009. The main changes as I see it are:
There is greater clarity on who will be “high end” employees (i.e. those whose remuneration will be regulated and disclosed under Recommendations 31 and 33). Previously it related to executives whose pay was expected to exceed the median of the executive board members. Now the definition is employees whose total expected remuneration (including salary, pension and short and long term bonuses/incentives) in the year is £1million or above. This simpler definition is no doubt going to be easier to apply. It does however emphasize how, in the City, earning a “mere” £500,000 would not categorize you as “high end”. This is notwithstanding that it must be quite likely that people earning these “lesser” sums could still be the people who design and implement risky transactions.
The pay bands relating to disclosure in the company’s accounts have been clarified. They will need to state the numbers of employees in the ranges £1million to £2.5million, £2.5million to £5million and in £5million bands thereafter. The disclosure should also be accompanied by an indication to the extent possible of the areas of business activity to which these higher bands of remuneration relate. These reports will no doubt be pored over when they are produced and, while in the first band there may be sufficient numbers to preserve anonymity, in the higher bands I suspect that it will be possible to identify the particular individuals concerned and so there may be some “naming and shaming”.
The pay structure should be incorporated in the FSA Remuneration Code. This at least suggests that, going forward, there may not be two sets of rules and that there should be symmetry between the implementation of the Walker Report and what the FSA has also being doing and was part of the Queens Speech a few days ago.
