SMF12 Chair of Remuneration Committee Hiring Guide

What Is the SMF12 Senior Management Function?

Senior Management Function 12 — the Chair of the Remuneration Committee — is the FCA-designated accountability for independent oversight of a UK regulated firm’s remuneration framework. The SMF12 holder is a Non-Executive Director who carries personal regulatory accountability, under the Senior Managers and Certification Regime (SMCR), for the effectiveness and independence of the remuneration committee’s governance of the firm’s pay structures — specifically, their alignment with the firm’s risk appetite, regulatory obligations, and long-term sustainability.

This guide explains the SMF12 role in depth — the FCA Remuneration Code, the remuneration committee’s governance mandate, what FCA pre-approval requires, what the candidate profile looks like, and how to run the search. It draws on the work Exec Capital does on regulated firm NED appointments across financial services, asset management, insurance, and fintech sectors.

The Chair of the Remuneration Committee is one of the most publicly scrutinised governance roles in any major firm. Institutional investors, proxy advisers, and the financial press monitor executive pay decisions closely, and the remuneration committee chair is the person who must defend those decisions — in the annual remuneration report, at the AGM, and in direct investor engagement. A Chair who does not command the technical knowledge of executive compensation, the independence of judgment, and the communication credibility to own these decisions publicly will be exposed quickly.

A Note from Our Founder — Adrian Lawrence FCA

The SMF12 appointment is the one where I most often see candidates who are technically capable of the remuneration committee oversight but who are not prepared for the investor engagement dimension. The Chair of the Remuneration Committee at a listed or major regulated firm will receive direct letters from major institutional shareholders about their pay decisions, will face ISS and Glass Lewis voting recommendations against the remuneration report, and may be asked to speak at the AGM on behalf of the committee. These are genuinely demanding public engagement requirements that not all NED candidates have experienced — and they need to be assessed directly, not assumed from general governance credentials.

The FCA Remuneration Code dimension adds a layer that is specific to regulated firms and that general remuneration committee experience from non-financial services backgrounds does not fully address. The risk alignment requirements, the deferral and clawback provisions, and the Material Risk Taker identification process are regulated firm specifics that the SMF12 Chair needs to understand and own.

Speak to Adrian about your SMF12 appointment →

Adrian Lawrence FCA  |  Founder, Exec Capital  |  ICAEW Verified Fellow  |  ICAEW-Registered Practice  |  Companies House no. 15037964  |  Placing senior executives at UK FCA-regulated firms since 2018

The FCA Remuneration Code and Its Governance Implications

The FCA Remuneration Code (SYSC 19) sets out the remuneration governance requirements that apply to FCA-regulated firms. The Code’s requirements vary by firm type and size — there are different proportionality tiers for larger and smaller firms — but the core principles apply broadly: remuneration must be consistent with, and promote, sound and effective risk management; it must not encourage risk-taking that exceeds the firm’s risk appetite; and it must be structured to align the interests of individuals with the firm’s long-term interests.

Key Code requirements that the remuneration committee oversees include:

Material Risk Taker identification. Firms must identify their Material Risk Takers (MRTs) — those whose professional activities have a material impact on the firm’s risk profile — and apply the Code’s enhanced remuneration requirements to them. The MRT population typically includes the senior executive team, key risk takers in investment, trading, and origination functions, and certain control function leaders. The remuneration committee oversees the MRT identification process and ensures that the pay structures for MRTs comply with the Code’s specific requirements.

Variable remuneration and risk alignment. The Code requires that variable remuneration — bonuses, performance shares, and other performance-linked pay — is assessed against risk-adjusted performance and does not reward risk-taking that exceeds the firm’s appetite. The remuneration committee oversees the performance assessment process and ensures that risk adjustments are applied before variable pay is awarded.

Deferral requirements. For larger regulated firms, a significant proportion of variable remuneration must be deferred — paid over a multi-year period — to align the individual’s incentives with the long-term consequences of their risk-taking. The specific deferral percentages and periods depend on firm type and size. The remuneration committee is responsible for ensuring that deferral structures comply with the Code’s requirements and are designed to achieve genuine risk alignment rather than simply meeting the minimum regulatory threshold.

Clawback and malus provisions. The Code requires firms to include clawback and malus provisions in variable remuneration arrangements — the ability to recover or reduce pay where the performance on which it was based has subsequently deteriorated, or where there has been misconduct. The remuneration committee oversees the design and application of these provisions and must be prepared to exercise them when the circumstances warrant.

The FCA’s remuneration guidance provides the authoritative reference for the Code’s requirements. For dual-regulated firms (banks and insurers), the PRA’s Remuneration Part of the PRA Rulebook sets out additional requirements, and the Chair needs to navigate both regulatory frameworks.

The Remuneration Committee’s Governance Role

The remuneration committee’s mandate extends beyond the FCA Remuneration Code to encompass the broader governance of executive pay at the firm.

Executive remuneration policy. The remuneration committee sets the firm’s executive remuneration policy — the framework of base salary, annual bonus, long-term incentives, and benefits that governs how the executive team is paid. At listed firms, this policy is subject to a binding shareholder vote at least every three years. The Chair is responsible for consulting major shareholders on proposed policy changes before the vote and managing the engagement process that builds shareholder support.

Individual remuneration decisions. Within the approved remuneration policy, the remuneration committee makes individual pay decisions for the executive team — setting salary levels, determining annual bonus outcomes, and assessing LTIP vesting against performance conditions. These decisions require the committee to exercise genuine judgment about individual and company performance, not simply approve what management proposes.

Board pay oversight. The remuneration committee typically also oversees NED fees and the board chair’s remuneration — ensuring that board pay is appropriately positioned relative to the market and does not compromise independence.

Gender pay and workforce remuneration oversight. An increasing number of remuneration committees now have broader workforce remuneration oversight responsibilities — not just executive pay but the fairness and consistency of pay across the organisation, including gender pay gap reporting and the pay ratio between CEO pay and median employee pay. The Chair of the Remuneration Committee at a listed firm must understand these obligations and be prepared to account for them in the annual remuneration report.

Institutional Investor and Proxy Adviser Engagement

The remuneration committee chair at a listed or major regulated firm is the primary point of contact for institutional investors on executive pay — a role that requires significant investor relationship skills alongside remuneration governance expertise.

The UK’s major institutional investors — Legal & General, Aviva, Royal London, LGIM, and others — publish detailed remuneration voting guidelines that set out their expectations on pay quantum, structure, performance conditions, and alignment. The remuneration committee chair needs to understand these guidelines for the firm’s major shareholders and to engage proactively with investors when proposed remuneration decisions are likely to be contentious.

Proxy advisers — ISS and Glass Lewis — issue voting recommendations to their institutional investor clients on executive pay resolutions. A negative recommendation from ISS or Glass Lewis on the remuneration report can swing enough institutional votes to defeat the resolution, which is a significant governance failure for the Chair. The Chair needs to engage with proxy advisers pre-AGM on contentious pay decisions and to understand their methodology well enough to anticipate where recommendations may be adverse. The Investment Association’s Institutional Voting Information Service (IVIS) provides additional context on institutional investor remuneration expectations.

For context on how executive compensation structures work and what institutional investors look for, the Executive Compensation Guide and the Executive Equity Incentives guide provide the commercial framework.

FCA Pre-Approval and the SMF12 Application

The SMF12 appointment requires FCA pre-approval via Form A, with the same fitness and propriety assessment as all SMF functions. The prescribed responsibility attached to SMF12 is the firm’s compliance with the FCA Remuneration Code — the Chair is personally accountable for ensuring that the remuneration committee’s oversight of remuneration structures is effective and that the firm’s pay arrangements comply with the Code’s requirements.

The FCA’s competence assessment for SMF12 will focus on the candidate’s knowledge of the FCA Remuneration Code, their experience of executive remuneration governance, and their understanding of the risk alignment requirements specific to regulated firms. Candidates with general corporate remuneration committee experience but without regulated firm remuneration code knowledge may face questions about their specific SMF12 competence. The application narrative should address Code-specific experience directly. The timeline from application to approval is typically 12–16 weeks for a clean application. Regulatory references covering six years of employment must be obtained from prior employers before submission.

The SMF12 Candidate Profile

Executive compensation expertise. The Chair needs a substantive understanding of executive compensation structures — base salary benchmarking, annual bonus design, LTIP metrics and vesting conditions, equity valuation, and the total remuneration competitiveness question. This does not require the technical depth of a remuneration consultant, but it does require enough knowledge to assess the quality of the advice being given and to challenge management proposals on their merits.

FCA Remuneration Code literacy. For regulated firm appointments, knowledge of the FCA Remuneration Code — MRT identification, deferral requirements, clawback provisions, and risk adjustment methodology — is specific to this role and should be assessed directly. Candidates from non-financial services backgrounds will need this knowledge.

Investor relations confidence. The ability to engage credibly with major institutional shareholders on contested pay decisions — to explain the committee’s reasoning, to absorb challenge constructively, and to represent the board’s position authoritatively — is a primary requirement for listed and major regulated firm SMF12 appointments.

HR and people leadership awareness. While the remuneration committee chair is not the CPO’s governance interlocutor in the way the risk committee chair is the CRO’s, effective remuneration oversight requires understanding the firm’s people strategy, talent market, and the broader workforce context in which executive pay decisions are made. A Chair whose attention is purely on executive pay without an understanding of its context across the wider organisation will miss the workforce fairness dimensions that proxy advisers and investors increasingly scrutinise.

Independence. As with all SMF NED functions, genuine documented independence from management is a regulatory and governance requirement.

Where SMF12 Talent Comes From

The SMF12 candidate pool draws from three primary backgrounds: former HR Directors, Chief People Officers, and Chief Human Resources Officers who have transitioned to NED careers and bring deep people and compensation expertise; NED practitioners with established remuneration committee experience at listed or major regulated firms; and former senior advisers from major remuneration consultancies (Willis Towers Watson, Korn Ferry, Aon, FW Cook) who have moved into NED roles. Each brings different strengths: HR executives bring people strategy depth; established NEDs bring governance process experience; former consultants bring technical compensation design expertise.

Running the SMF12 Search and Compensation

SMF12 searches follow the same regulatory due diligence framework as all SMF NED appointments. The specific assessment dimension for SMF12 is remuneration governance expertise — a structured conversation about the candidate’s approach to MRT identification, their experience of managing investor engagement on contentious pay decisions, and their knowledge of the FCA Remuneration Code. Board chair and CEO involvement in the final stage assessment is essential.

SMF12 NED fees at mid-size regulated firms typically run from £45,000 to £80,000 per annum. Listed and major financial services firms pay £80,000–£130,000 for the role. The remuneration committee meets three to five times per year, with additional engagement for salary reviews, bonus determinations, LTIP awards, and investor consultations. Total time commitment is typically 25–35 days per annum.

Common Hiring Mistakes

1. Prioritising investor relations skills over remuneration governance depth. A Chair who is excellent at investor communication but lacks the technical remuneration knowledge to challenge management pay proposals will ultimately ratify executive pay structures rather than govern them.

2. Neglecting FCA Remuneration Code knowledge. General corporate remuneration committee experience does not cover the Code’s specific requirements. The assessment should test Code-specific knowledge directly for any regulated firm SMF12 appointment.

3. Under-estimating the investor engagement burden. The pre-AGM consultation process for a contentious pay decision can consume 30–40% of the Chair’s annual time commitment in the months leading up to the AGM. Candidates who do not appreciate this demand will be under-prepared for the role’s most visible and high-pressure obligations.

4. Appointing someone whose current employment creates independence questions. Remuneration committee independence requirements are specific: the Chair should have no material financial relationship with the management team whose pay they are deciding. This is broader than simply not being employed by the firm.

How Exec Capital Approaches SMF12 Appointments

Exec Capital runs SMF12 searches for FCA-regulated firms with regulatory due diligence and remuneration governance assessment embedded from the outset. The SMF12 appointment sits within our financial services governance practice and draws on our relationships with former senior HR and compensation executives building NED portfolios. Adjacent SMF NED appointments include the SMF11 Chair of Audit Committee, the SMF10 Chair of Risk Committee, and the SMF13 Chair of Nominations Committee.

Remuneration Committee Governance at PE-Backed Firms

At PE-backed regulated firms — which are increasingly common as private equity investment in financial services has grown — the remuneration committee governance operates in a different context from the listed firm framework. PE-owned regulated firms do not have the same public shareholder accountability that shapes listed firm remuneration governance, but they are still subject to the FCA Remuneration Code requirements for their material risk taker population, and the PE house’s own compensation governance expectations add a further layer of oversight.

PE houses typically have views on management team compensation that are informed by their portfolio management experience and their exit objectives. The remuneration committee chair at a PE-backed regulated firm needs to manage the relationship between the FCA’s regulatory requirements on remuneration (which may limit management’s total variable remuneration in ways the PE house does not initially anticipate) and the PE house’s commercial compensation expectations (which may include management incentive plan structures that are not straightforwardly compatible with the Remuneration Code’s requirements).

The most common tension is between the PE MIP (Management Incentive Plan) and the Remuneration Code’s requirements on deferral and instrument composition for material risk takers. Where the MIP is structured as a capital gain rather than employment income, it may fall outside the Remuneration Code’s scope — or it may not. The legal and regulatory analysis required to determine the interaction between a PE MIP and the FCA Remuneration Code is specialist work that requires legal counsel with both PE structuring and financial services regulatory expertise. The remuneration committee chair who does not understand this interaction at the time the MIP is designed will face regulatory issues at the time of payouts.

Executive Pay and Workforce Pay: The Section 172 and Pay Ratio Context

At UK listed companies, the remuneration committee’s work increasingly extends beyond executive pay to encompass the relationship between executive compensation and workforce pay. The UK Corporate Governance Code’s provision on executive-workforce pay relativity — specifically, the requirement for remuneration committees to explain how they have considered workforce pay when setting executive remuneration — has made the pay ratio (CEO pay divided by median employee pay) a prominent governance metric.

The remuneration committee chair at a listed company is expected to be able to explain the pay ratio narrative to investors, proxy advisers, and the workforce in a way that is both defensible and credible. Where the pay ratio has increased — either because executive pay has risen faster than workforce pay or because the workforce mix has changed — the chair needs a clear and honest explanation of why this occurred and what the committee’s response has been.

The Section 172 duty (Companies Act 2006) — the duty to promote the success of the company — requires directors to have regard to the long-term interests of the company’s employees alongside other stakeholders. The remuneration committee’s work on workforce pay structures, living wage commitments, and the distribution of performance-related pay across the workforce (rather than concentrating it at the senior management layer) is increasingly part of the Section 172 reporting that large UK companies produce.

Malus, Clawback, and the Conduct and Culture Dimension

The malus and clawback provisions of the FCA Remuneration Code are among the most consequential governance tools the remuneration committee chair manages — and among the most rarely invoked. The design of adequate malus and clawback provisions is relatively straightforward; the willingness to invoke them when circumstances warrant is the harder governance test.

Malus — the reduction of an unvested deferred award before it vests — is the more commonly invoked of the two provisions, typically applied where a material adverse outcome (a significant regulatory breach, a fraud, a major conduct failure) has been linked to the performance period for which the award was granted. Clawback — the recovery of compensation already paid — is the more powerful provision but requires legal mechanisms (typically contractual provisions allowing the firm to deduct clawback amounts from future remuneration or to demand repayment) that must be in place before the triggering event occurs.

The FCA has made clear that it expects malus and clawback to be genuinely applied when warranted — not merely to exist as provisions that are never invoked. Remuneration committee chairs at regulated firms should review their malus and clawback policies annually, ensure the provisions are legally robust, and document the committee’s active consideration of whether malus or clawback is warranted following any material adverse event — even where the conclusion is that invocation is not appropriate. This documented consideration process demonstrates to the FCA that the governance is substantive rather than nominal.

The Remuneration Committee and Diversity Pay Reporting

UK listed companies are required to report on their gender pay gap annually under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. While the gender pay gap report is produced by the HR function, the remuneration committee chair is the governance accountable for understanding and explaining the pay gap data — specifically, the relationship between the gender pay gap and the remuneration structures the committee has approved.

Gender pay gaps at UK financial services firms are among the widest of any sector, reflecting the concentration of women in lower-paid support and administration roles and the concentration of men in senior trading, investment management, and client-facing roles that attract the highest variable remuneration. The remuneration committee chair who can engage substantively with the causes of the firm’s gender pay gap — and with the remuneration design changes that could reduce it over time — provides materially better governance than one who treats the gender pay gap report as a compliance filing without strategic significance.

Ethnicity pay gap reporting — currently voluntary for UK firms but widely anticipated to become mandatory following the Ethnicity Pay Gap reporting consultation — adds a further dimension to the committee’s pay equity oversight. Remuneration committee chairs who are ahead of this reporting requirement will be better prepared for the governance and investor engagement that mandatory reporting will require.

Onboarding the SMF12 Chair of Remuneration Committee

The incoming Chair of the Remuneration Committee needs a structured onboarding programme that covers both the regulatory and the commercial dimensions of the role. The pre-boarding briefing should include: the firm’s current remuneration policy and the most recent annual remuneration report; the applicable FCA Remuneration Code provisions and their specific requirements for the firm’s category; the current material risk taker identification and the rationale for the population boundaries; the outstanding malus and clawback cases (if any); the firm’s gender pay gap data; and the proxy adviser and investor guidance that applies to the firm’s remuneration governance.

The first 30 days should include private meetings with the CFO, the CRO, and the head of the HR or reward function — the three executives whose work most directly intersects with the remuneration committee’s governance. The new Chair should also meet the key institutional investors and proxy advisers who engage on remuneration matters, both to introduce themselves and to understand the investors’ current concerns and expectations. An early investor engagement investment pays dividends at the AGM season.

The first remuneration committee meeting should be attended as an observer by the incoming Chair before they formally take the chair — to understand the committee’s current working style, the quality of the management information presented, and the dynamics between the committee members and the executives who present to them. This observation period, even if only one meeting, significantly accelerates the new Chair’s ability to run an effective committee from the start of their formal tenure.

Remuneration Committee Effectiveness Review

The UK Corporate Governance Code’s requirement for an annual board effectiveness review applies to the board’s principal committees as well as the full board. The remuneration committee should conduct an annual effectiveness review — either self-assessment led by the nominations committee chair or an external review as part of the broader board effectiveness process — that assesses the quality of the committee’s governance, the adequacy of the information it receives, the effectiveness of its engagement with the risk function, and the quality of the investor relations on remuneration matters.

Common findings from remuneration committee effectiveness reviews include: inadequate risk function input into bonus pool decisions; over-reliance on remuneration adviser recommendations without independent challenge; insufficient attention to workforce pay equity alongside executive pay decisions; and AGM preparation that is reactive rather than proactive. The Chair who identifies these findings honestly and implements improvements is providing more durable governance value than one who produces a self-assessment that finds everything satisfactory.

For the broader board governance context within which the SMF12 Chair operates, the Board Effectiveness Review Guide provides the relevant framework. The Executive Compensation Guide and the Executive Equity Incentives guide provide the commercial compensation context within which the remuneration committee’s decisions are made. For firms making changes to their incentive structures — introducing new LTIP designs, updating deferral structures to Remuneration Code requirements, or designing equity arrangements for PE-backed management teams — the Sweet Equity guide and the LTIP Structures guide provide the relevant commercial and structural frameworks that the remuneration committee chair needs to understand and govern.

The Remuneration Committee and CEO Pay Governance

CEO pay governance is the remuneration committee’s most visible and most commercially consequential work. The CEO’s total compensation — base salary, annual bonus, long-term incentive awards, pension, and benefits — must be set at a level that attracts and retains the calibre of CEO the firm needs, while being defensible to investors and the public as fair and proportionate to performance. Navigating this balance is the central challenge of the remuneration committee chair’s role.

Benchmarking and market positioning. CEO pay is typically benchmarked against a peer group of comparable firms. The selection of the peer group is one of the most consequential decisions the remuneration committee makes: a peer group skewed towards larger, higher-paying firms will consistently produce benchmark data that justifies above-market pay. Best practice requires that the peer group be genuinely comparable on multiple dimensions — revenue, market capitalisation, complexity, sector — and that the committee exercises judgment about the benchmark data rather than treating it as an automatic justification for award levels.

Performance condition design. The metrics against which long-term incentive awards vest — the performance conditions — determine whether the LTIP is genuinely aligned with the firm’s strategic goals or merely reflects financial outcomes that would likely have occurred regardless of management performance. The remuneration committee is responsible for designing performance conditions that are stretching (the award should not vest unless genuine performance above the base case is delivered), relevant (the metrics should measure what actually creates long-term value for the firm), and understandable (investors and employees should be able to assess whether the conditions are likely to be met). At regulated firms, the performance conditions must also be consistent with the FCA Remuneration Code’s requirement for risk-adjusted performance assessment.

Discretion and override provisions. The UK Corporate Governance Code gives remuneration committees the power to exercise discretion to adjust formulaic LTIP outcomes — both upward and downward — where the formula produces a result that does not reflect underlying company or individual performance. The committee chair needs to be prepared to exercise this discretion when the circumstances warrant, and to explain any override in the remuneration report with sufficient clarity that investors can assess its justification. Both under-use of downward discretion (where formula outcomes are accepted despite poor performance) and over-use (where adjustments are made to protect pay outcomes that performance has not supported) attract investor scrutiny.

Clawback and malus in practice. The FCA Remuneration Code’s clawback and malus requirements are often implemented but rarely exercised. The remuneration committee chair needs to ensure that the firm has a governance process for assessing clawback and malus triggers when potential circumstances arise — a regulatory enforcement action, a material restatement of financial results, or a misconduct finding. The committee’s willingness to exercise these provisions when they are warranted is a test of its independence and its commitment to the pay-for-performance principle that the provisions are designed to enforce.

Executive Pay and Workforce Pay: The Pay Ratio

The Companies (Miscellaneous Reporting) Regulations 2018 require quoted companies to report annually on the ratio of the CEO’s pay to the median, 25th percentile, and 75th percentile of UK employee pay. This disclosure — the pay ratio — has become an increasingly prominent element of proxy adviser and institutional investor scrutiny of executive pay, particularly where the CEO’s pay package is large relative to the firm’s workforce.

The remuneration committee chair needs to understand the firm’s pay ratio and to be prepared to explain it in the context of the firm’s pay practices across the workforce. A high pay ratio is not automatically problematic — a CEO at a professional services firm with a highly paid workforce will have a lower ratio than a CEO at a retailer with a large number of minimum-wage employees, regardless of the absolute level of CEO pay. The committee’s role is to ensure the ratio is understood, contextualised, and where it reflects genuine inequity in the firm’s approach to pay, to take action to address it.

Many remuneration committees now also oversee the firm’s gender pay gap report — the mandatory reporting on the difference between men’s and women’s median hourly pay. While the remuneration committee is not typically the primary accountable body for gender pay (that typically sits with the CPO or CHRO), the pay equity dimension is closely connected to the executive pay governance agenda and the committee chair should have a view on how the firm’s gender pay gap is being addressed.

Onboarding the SMF12 Chair

The Chair of the Remuneration Committee’s onboarding should include a thorough review of the firm’s current remuneration framework: the current executive team’s pay packages, the LTIP scheme rules, the FCA Remuneration Code compliance assessment, the MRT identification list, and the most recent remuneration report and any shareholder feedback it generated. The outgoing Chair — where one exists — should provide a briefing on any ongoing remuneration issues: a performance condition likely to miss its target, an investor concern about pay levels, or an MRT classification challenge.

The Chair’s early engagement with the firm’s remuneration advisers — typically a specialist remuneration consulting firm — is important. Understanding the advisers’ current work, their relationship with the committee, and their view of the firm’s market positioning will help the Chair assess whether the advice being provided is genuinely independent and whether the remuneration framework is competitive without being excessive. The committee should formally confirm the engagement of its remuneration advisers annually, with a disclosure in the remuneration report about the nature of the advice provided and the adviser’s fees.

Pre-AGM investor engagement in the Chair’s first year may require rapid immersion in the shareholder register and the positions of the firm’s major investors and proxy advisers on executive pay. If the Chair joins in the autumn or winter of a year when a major pay decision is being made, they may need to engage with major shareholders before they have had the opportunity to develop a full understanding of the remuneration framework. The outgoing Chair’s availability for a handover briefing in these circumstances is critical.

Common Hiring Mistakes (continued)

5. Not engaging remuneration specialist advisers from the outset. The technical complexity of FCA Remuneration Code compliance, LTIP scheme design, and institutional investor engagement justifies specialist remuneration consulting support for most regulated firm remuneration committees. A Chair who attempts to manage the committee’s work without specialist advice in the FCA regulatory context is carrying more technical risk than the role requires. Identifying and engaging appropriate remuneration advisers should be one of the new Chair’s early priorities.

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Further Reading and Authoritative Sources

The FCA Remuneration Code guidance and the FCA’s Material Risk Taker guidance are the primary regulatory references for the SMF12 mandate. For dual-regulated firms, the PRA Remuneration Part provides the additional requirements applicable to banks and insurers.

The Investment Association Remuneration Principles for Asset Managers and the IA’s broader executive remuneration guidelines set out institutional investor expectations that the remuneration committee chair at a listed firm must navigate. The UK Corporate Governance Code provisions on remuneration — particularly Principles P and Q and the supporting provisions — are the governance code baseline for listed firm remuneration committees.

For proxy adviser methodology, ISS’s UK Voting Guidelines and Glass Lewis’s UK policy updates are published annually and are essential reading for any remuneration committee chair at a listed UK firm ahead of the proxy season.

The Remuneration Consultants Group provides the UK voluntary Code of Conduct for independent remuneration advisers — the governance standard that defines how remuneration committee advisers should engage with their clients and manage conflicts of interest. The Chair of the Remuneration Committee should ensure that any remuneration adviser engaged by the committee is a signatory to this Code and that their independence from the executive management is assessed and documented annually.

Related Exec Capital guides: SMF Roles: A Complete Guide · SMF11 Chair of Audit Committee · SMF13 Chair of Nominations Committee · How to Hire a CHRO · Executive Compensation Guide · Financial Services Executive Hiring