2026 executive pay: The Investment Association's latest update

The IA note that they have been pleased with the reception to their Principles of Remuneration, which were extensively revised last year. They will not be making changes to the Principles for 2026.

While the IA is satisfied that companies adopted the reviewed Principles, especially around shareholder engagement and notes that the Principles remain unchanged since last year's publication, the IA has identified areas where implementation of the Principles can be strengthened and outlined investor expectations for the year ahead. The letter instead highlights areas of particular focus where they feel implementation of the Principles can be improved:

• Company-specific rationales: Generic justifications such as "competitiveness" or "retention" are not considered sufficient. Investors want detailed explanations of why a particular approach is right for the company's strategy and circumstances, and how it will drive sustainable performance
• Benchmarking and peer comparisons: Benchmarking should not be the sole basis for pay increases. Where used, committees should explain peer group selection, relevance, and adjustments for size and complexity. Large increases to "catch up" with market norms must be justified beyond market practice
• Hybrid long-term incentive schemes: Flexibility for hybrid structures remains, but investors are cautious. Proposals will generally be supported only where global talent competition or a significant U.S. footprint exists. Clear alignment with strategy and early consultation are essential to secure shareholder approval
• Bonus deferral and shareholding: Deferral continues to be an important mechanism for malus and clawback. Proportionate approaches to reduce the level of deferral may be acceptable once shareholding guidelines are met, but complete removal of deferral would not be considered appropriate
• In-flight awards and discretion: Retrospective changes or retesting undermine scheme integrity. Discretion should only be used in exceptional circumstances, supported by robust justification and shareholder engagement
• Improving consultation: The IA will create a directory of member contacts for remuneration consultations and re-establish collective meetings to improve engagement between companies and shareholders
• Wider stakeholder experience: The IA noted that given on-going geopolitical uncertainties, cost of living pressures and the impact of National Insurance changes on businesses, investors continue to want to understand how remuneration committees take the experience of employees, customers and other stakeholders into account when making executive pay decisions
• Non-Executive Director (NED) Remuneration: NEDs should be fairly compensated, in a way that reflects time commitment and the complexity of the role. The IA note that they support NEDs receiving a portion of their fees in shares purchased at the market rate but have reaffirmed the position of the Corporate Governance Code that performance-related pay is not appropriate for independent NEDs

WTW's Perspective

The updated version of the IA's Principles published last year have generally been well received and companies have welcomed the flexibility it provides. However, the IA has emphasised that is also brings a need for transparency and tailored rationales. Companies should prepare for deeper investor engagement and ensure remuneration structures are defensible, aligned to company strategy (company-specific and evidence-based), and sensitive to stakeholder expectations. Early consultation and robust disclosure will remain critical to securing shareholder support.

Contacts

---

Anne-Charlotte Gissinger

Director, Executive Compensation and Board Advisory, United Kingdom

email Email phone +33 6 72 05 08 30

---

Alex Little

Senior Director, Executive Compensation & Board Advisory

email Email phone +44 7985 125138

---