The Financial Reporting Council has proposed changes to the British Corporate Governance Code, including a revision that would require executives at U.K.-listed companies to hold on to bonuses paid as shares for five years.
In a paper published Dec. 5, the Financial Reporting Council, or FRC, said it was consulting on the proposal to extend the recommended minimum vesting and post-vesting holding period for executive share awards from three to five years. The regulator said the aim was "to encourage companies to focus on longer-term outcomes in setting pay."
"We understand that market practice is already moving in this direction, with many companies already adopting a minimum five-year vesting and holding period," it said. "By updating this, we aim to raise standards for all."
Also, under the proposed revisions, individuals who have spent more than nine years on a board will no longer be considered independent. However, the FRC noted that in some circumstances, companies can explain why they wish to retain a nonexecutive director or chair beyond nine years.
The proposed changes also called for ethnic and social diversity in the composition of companies' boards.