Executive Remuneration in the UK and Ireland: Balancing Flexibility and Baseline Expectations
Overview
While the 2024 AGM season was characterised by the lowest levels of dissent on remuneration in a decade, opposition to remuneration-related proposals in the UK and Ireland during 2025 returned to levels aligned with prior years. Approximately two thirds of FTSE 350 and ISEQ 20 companies have now held their 2025 annual general meeting (AGM). These meetings took place against the backdrop of a significant update to the UK Investment Association’s (IA) Principles of Remuneration in the second half of the 2024 calendar year. The revised Principles, which are effectively seen as best practice guidelines for UK listed companies, shifted their emphasis to one of flexibility and acceptance of companies adapting pay structures to align with their specific business circumstances and strategies. Despite expected leniency, as illustrated in Figure 1 below, the 2025 AGM season saw a significant rise in instances of significant opposition (20% or more of votes cast against boards’ recommendations) on both binding remuneration policy votes (ex-ante votes on pay guidelines) and advisory votes on remuneration reports (ex-post votes on the implementation of pay guidelines). While the evolution of market practice in 2024 may have initially suggested there would be a softening of investor views on significant changes to pay practices at UK companies, voting trends in 2025 indicate that investors and proxy advisors continue to closely scrutinise companies’ pay practices and associated disclosures.
Figure 1: Proportion of Companies that Received Significant Opposition on a Remuneration Proposal (FTSE 350 & ISEQ 20)
Source: Diligent Market Intelligence. Data from 1 January to 20 June each year.
We set out below our key observations on the evolution of the governance landscape in relation to executive remuneration in 2025:
The IA’s revised Principles. Amid concerns about global competitiveness and talent retention in the UK, the IA released its new Principles of Remuneration on 8 October 2024, acknowledging the possibility of UK companies adopting US-style practices such as restricted shares (long-term incentive plans – or LTIPs – without performance conditions), hybrid plans mixing LTIPs with and without performance conditions and a recognition of the gap between pay levels in the UK and the US among senior executives. Despite emphasising greater flexibility for companies to adapt their practices to their own circumstances, the Principles continue to include important guardrails. They clarify that shareholders expect restricted shares or the restricted share component of a hybrid scheme to be discounted to reflect the higher certainty of payout involved in these schemes. Remuneration committees are also expected to consult with shareholders, explain the rationale for implementing these structures, and use minimum performance underpins and discretion to prevent scenarios of reward for failure.
Proxy Advisors’ Policies. In line with the IA’s revised Principles, ISS updated its guidelines in 2025 to indicate that LTIPs should consider a company’s individual circumstances and strategic goals while taking into account the remuneration structures of the wider workforce. ISS has not introduced any new expectations regarding the use of restricted shares and hybrid plans in its guidelines, which already covered the scenario of a company adopting a remuneration structure different from the salary/bonus/performance share model typically encountered at UK companies. In such instances, ISS considers the alignment between the pay structure and the company’s strategic objectives, the long-term focus of the structure, as well as the level of certainty of the rewards.
In contrast, Glass Lewis introduced a new section on hybrid plans in its guidelines for 2025, outlining its expectations that companies provide a clear rationale for adopting a hybrid scheme, reduce the maximum opportunity compared to the previous LTIP, and ensure a total vesting and holding period of at least five years.
Binding Votes on Remuneration Policies. As of June 20, all instances of significant shareholder dissent on remuneration policies in 2025 involved the allocation of shares to executives without performance conditions. The proportion of companies whose remuneration policies were opposed by Glass Lewis doubled in 2025, with several objections related to the adoption of restricted share plans.
While the 2025 AGM season may be characterised as one where investors and companies disagreed with the merits or conditions of using restricted shares, there were also a number of companies that proposed meaningful changes to their pay practices without encountering significant shareholder opposition. In each of these instances, developing an understanding of, and taking steps to address, investor and proxy advisor expectations through meaningful shareholder engagement and strong reporting was central to securing strong shareholder support at the AGM.
Advisory Votes on Remuneration Reports. Following low levels of dissent on remuneration reports during the 2024 AGM season, 2025 marked a notable return towards historical norms. The issues raised by shareholders were consistent with previous years (as set out in Table 4), reinforcing the importance of clear alignment between pay and performance for investors when evaluating advisory remuneration reports, regardless of the evolution of market practice. Companies are expected to continue to set out compelling disclosures for significant salary increases and sizeable variable remuneration payouts, explaining the process underpinning remuneration committee decisions and detailing why they are in the best interests of the company and its shareholders.
Of the 17 remuneration reports that faced significant dissent in 2025, only four were opposed by Glass Lewis. In comparison, ISS opposed at least twice as many of these proposals, highlighting differing approaches between the leading proxy advisors in their analysis of remuneration reports. Additionally, the impact of negative ISS recommendations reflects higher levels of alignment between ISS recommendations and voting outcomes.
Amid growing concerns about global competitiveness and talent retention, the IA revised its Principles of Remuneration to emphasise the need for flexibility, allowing issuers to adopt remuneration structures aligned with their specific circumstances and strategic goals. Proxy advisors have at least partially aligned their positions with those of their investor clients. Nevertheless, investors and their advisors continue to scrutinise pay proposals closely, opposing practices perceived as overly generous or misaligned with company performance. In this evolving environment, meaningful engagement with shareholders and strong reporting remain as important as ever.
Methodology
The primary objective of this paper is to examine how voting outcomes have evolved within the new governance environment in 2025. Specifically, the analysis focuses on AGM voting results at FTSE 350 and ISEQ 20 companies during the period from 1 January to 20 June 2025, as well as corresponding proxy voting outcomes from the previous four years. AGM results are based on data from Diligent Market Intelligence obtained from companies’ disclosures. We have considered vote results excluding abstentions (legal basis). We have also defined instances of significant opposition (or dissent) in line with the UK Corporate Governance Code as proposals receiving 20% or more of against votes.
To identify the primary drivers underlying instances of significant dissent, we reviewed rationales disclosed by investors, as available through Diligent Market Intelligence. In cases where this information was not yet available, we conducted a review of company annual reports to form our own assessments.
Additionally, we analysed the evolution of Glass Lewis recommendations, which were also obtained through Diligent Market Intelligence. While we do not have access to a similarly comprehensive dataset for ISS recommendations, we identified a number of ISS recommendations through supplementary research.
Background – Evolving Guidelines on Remuneration
Revision of the IA’s Principles
On 8 October 2024, the IA published its revised Principles of Remuneration, which set out its members’ expectations on remuneration committees’ approaches to remuneration in the UK. The Principles are used by a significant number of UK investors, and both large proxy advisors, Glass Lewis and ISS, in determining how to engage with companies and vote on remuneration reports and remuneration policies.
The Principles have not changed significantly in terms of what is considered best practice in the development of remuneration structures and decisions in the UK. However, the IA has simplified the Principles as well as including certain clarifications regarding their role, namely that they should not be seen as rules, but as principles and guidelines.
The change in approach and clarifications are unsurprising given the backdrop of concerns about the competitiveness of UK markets. The new guidelines acknowledge the potential for UK companies to adopt US-style practices such as restricted shares and hybrid LTIP structures, which are the dominant model in the US, with over two-thirds of S&P 500 companies using hybrid plans, according to Semler Brossy. However, the Principles emphasise that when determining the maximum grant size of LTI awards, remuneration committees should consider the potential payout at target and maximum levels, as well as probability of vesting. Ultimately, shareholders expect restricted shares, or the restricted-share component of hybrid plans, to be appropriately discounted to reflect the higher payout certainty. In contrast to US market norms, UK shareholders have also sought the inclusion of minimum performance underpins to be applied and discretion to be exercised to avoid any reward for failure. Furthermore, vesting periods in the UK are expected to be maintained at a minimum of three years for equity-based, long-term incentives.
Throughout the Principles, there is consistent reference to “case-by-case” approaches in evaluating company pay practices, an effort to reiterate that the guidelines and principles should not be taken as providing a rules-based system for evaluating companies’ approaches to remuneration. Given the aim of increasing companies’ ability to implement a remuneration structure that aligns with its specific circumstances, the IA is firm in pointing to the value of shareholder engagement and consultation on remuneration, to ensure companies clearly explain the merits of taking more unique approaches.
Updates to Proxy Advisors’ Voting Guidelines
Prior to 2025, both leading proxy advisors, ISS and Glass Lewis, had already included frameworks for evaluating restricted share plans in their UK voting guidelines. These frameworks referenced the IA’s Executive Remuneration Working Group, which, as early as 2016, recommended that remuneration committees be given flexibility to adopt pay structures that best align with the company’s strategy and business needs. Both advisors highlighted the importance of maintaining a long-term focus and reducing maximum pay opportunities to reflect the greater certainty of payout typically associated with restricted shares. Glass Lewis also considered the role of minimum performance underpins in such structures.
In its 2025 guidelines, ISS explicitly acknowledges the IA’s revised Principles of Remuneration, emphasising that LTIPs should be “appropriate for a company’s individual circumstances, support its strategic objectives, and take into account the remuneration structures of the wider workforce.” ISS also incorporated new guidance aligned with the IA’s Principles regarding salary setting, noting that salaries should be based on relevant talent markets. Additionally, ISS stresses the importance of selecting and clearly disclosing a comparator group for LTIPs that is appropriate to the company and its industry.
Glass Lewis, in contrast, introduced a dedicated section on hybrid plans in its 2025 guidelines. Specifically, when such plans are proposed to a shareholder vote, Glass Lewis expects to see “(i) a rationale as to why a hybrid model is preferred over a single structure; (2) a reduction in maximum opportunity compared to the previous LTIP, with an explanation on the methodology used to determine the discount rate; and (iii) a total vesting and post-vesting holding period of at least five years.” Glass Lewis also emphasises the importance of providing disclosures on comparator groups when a company benchmarks itself against global peers.
Voting Outcomes - 2025
Remuneration Policies
As shown in Table 1, average support for remuneration policies remained broadly unchanged in the last two years, though the proportion of companies that received significant dissent increased from 8.8% in 2024 to 11.4% in 2025. This level of dissent is only slightly below that observed in 2022, when the majority of these companies last submitted their three-year remuneration policies for shareholder approval.
The proportion of companies that received an “Against” recommendation from proxy advisor Glass Lewis rose significantly from 10.3% in 2024 to 19.6% in 2025. This proportion is also higher than that observed in 2022.
Among the eight companies that received significant dissent on their remuneration policy in 2025, all but one received a negative recommendation from Glass Lewis. That company, however, received a negative recommendation from ISS, which likely contributed to the overall level of dissent observed on its remuneration policy.
Collectively, these figures indicate that while investors and proxy advisors have signalled a willingness to consider pay packages tailored to a company’s specific circumstances, they continue to apply rigorous scrutiny to significant changes in remuneration structures and disclosures explaining how those changes are in the best interests of the company and its shareholders.
Table 1: Voting Statistics on Remuneration Policies
Source: Diligent Market Intelligence
As set out in Table 2, over the past three years, the introduction of restricted shares combined with an increase in overall pay opportunity has been the most frequent source of significant opposition to remuneration policies, impacting a total of eight companies – two in 2024 and six in 2025. The second most common driver of opposition was a substantial increase in pay opportunity without the use of restricted shares, which affected three companies in 2023 and one in 2024.
In 2023, the primary causes of dissent were more varied, including concerns such as the absence of a cap on annual bonus plans, excessive pension contributions for executives (i.e. contributions exceeding those offered to the broader workforce), and insufficient disclosure of performance conditions. By contrast, over the course of 2024 and 2025, instances of significant dissent related to the allocation of shares without performance conditions, with only one exception in 2024. The analysis of voting in 2025 demonstrates the consistently evolving nature of company practice and investor expectations in the UK, with the drivers of significant opposition in 2025 markedly different to those from just two years previously.
Table 2: Primary Drivers of Dissent on Remuneration Policies
Source: Diligent Market Intelligence
It is worth noting that several companies in 2025 implemented meaningful changes to their pay practices without encountering significant shareholder opposition. These include companies proposing substantial increases to their pay packages and others introducing restricted shares into their LTIP. As such, it would be inaccurate to conclude that companies are not benefiting from a more flexible environment. Rather, the key insight is that companies must learn how to navigate this new landscape effectively. This entails developing an understanding of investor and proxy advisor expectations on pay structures, shareholder engagement, and corporate reporting.
Remuneration Reports
As illustrated in Table 3, average support for remuneration reports has remained relatively stable over the past two years. However, the proportion of companies facing significant dissent rose sharply, increasing from 3.2% in 2024 to 7.9% in 2025. Although this figure remains lower than the levels recorded between 2021 and 2023, it highlights that investors continue to closely scrutinise remuneration reports.
After declining from 10.5% in 2023 to 5.9% in 2024, the proportion of companies receiving an “Against” recommendation from Glass Lewis remained relatively stable in 2025 at 5.6%. Combined with our analysis of remuneration policies, this suggests that Glass Lewis may now be more inclined to oppose remuneration policies it views as misaligned with its clients’ interests. However, it also appears less likely to oppose remuneration reports that reflect the application of approved remuneration policies.
Table 3: Voting Statistics on Remuneration Reports
Source: Diligent Market Intelligence
As shown in Table 4, excessive payouts under the variable components of remuneration – reflecting a perceived misalignment between pay and performance – represented the most common source of significant opposition to remuneration reports in 2025, affecting four companies. Additionally, two other companies faced opposition due to excessive payouts combined with a perceived failure to address shareholder dissent raised in previous years. Significant salary increases represented the primary driver of dissent at two companies, while two others faced opposition due to both a substantial salary increase and an increase in its LTIP. Other factors contributing to significant shareholder opposition to remuneration reports in 2025 included disclosure shortcomings and the relaxation of performance conditions. For companies seeking approval of a remuneration policy and report in the same year, the differing approaches to voting on those proposals by investors should be reflected in remuneration committee decision-making, direct shareholder communication and annual report disclosure.
Table 4: Primary Drivers of Dissent on Remuneration Reports in 2025
Source: Diligent Market Intelligence
After the historically low levels of dissent on remuneration reports during the 2024 AGM season, 2025 saw a notable shift back toward historical norms. In contrast to voting on remuneration policies, instances of dissent on remuneration reports have remained somewhat consistent, with shareholders most likely to raise concerns regarding levels of remuneration not clearly justified by performance or a clear change in circumstance at a company. Again, while there is evidence that shareholders have become more amenable to larger pay packages, companies must continue to provide clear and compelling rationales – through engagement and disclosure – to avoid negative voting outcomes at AGMs.
Outlook
Shareholder meetings that have taken place to date in 2025 highlight the delicate balancing act required from companies seeking to take advantage of the new, more flexible environment and tailor their remuneration structures to their specific business needs and strategies. Voting outcomes in 2025 have served as a clear reminder that maintaining alignment with baseline expectations from investors and proxy advisors regarding remuneration structures, shareholder engagement, and corporate reporting remains essential for securing their support. Without meaningful engagement and clear reporting, companies run the risk of failing to meet investor and proxy advisor expectations on detailing why a particular remuneration structure is appropriate for the business and supports the company’s long-term success.
For companies yet to hold their AGM, now is the time to finalise proposals and related disclosures. Where significant changes are being considered, there remains an opportunity to refine pre-AGM engagement strategies to address potential concerns and build consensus effectively. For companies that have already held their AGM, the focus should now shift to preparing a post-summer engagement strategy and anticipating any structural changes to be brought to pay structures. In instances where no major changes are anticipated prior to the next AGM, maintaining a regular dialogue with shareholders and other key stakeholders will still help them stay attuned to evolving governance expectations and strengthen these important relationships.
The significant changes in pay practices adopted by a number of companies in 2024 and 2025 are likely to impact the competitiveness of pay structures across UK and Irish companies. In this context, organisations planning to review their remuneration policies ahead of the 2026 AGM should prioritise early and meaningful engagement with shareholders and proxy advisors to maximise support for proposed changes.
Finally, companies that faced significant dissent on their remuneration policy or report during the 2025 AGM will be required to take steps to engage with shareholders over the coming months, as a means of meeting regulatory expectations but also minimising the risk of further dissent at the 2026 AGM. Companies should also be mindful of the potential consequences for their remuneration committee chairs, who may be held accountable by investors and proxy advisors for perceived inaction in addressing shareholder concerns. Rebuilding trust with stakeholders is also key to mitigating the risk of shareholder activism, as activist investors can seek to exploit compensation-related vulnerabilities to identify a level of dissatisfaction among the shareholder base and leverage it to push for broader board or strategic changes.
In this dynamic environment, companies that prioritise meaningful discussions with their key stakeholders will be best positioned to navigate the complexities of executive remuneration and maintain the confidence and support of all key stakeholders.
The Team at FTI Consulting
In this evolving landscape of increased flexibility and scrutiny, companies must prioritise designing remuneration structures that align with business objectives while satisfying diverse stakeholder expectations. FTI Consulting’s integrated team of reward specialists and communications professionals brings deep technical expertise in remuneration design, taxation, and governance, combined with comprehensive understanding of the proxy advisory, stewardship, and activism landscape. We have a proven track record in helping companies develop robust remuneration programmes and achieve better outcomes through effective reporting and engagement. We partner with boards and management teams to navigate complex stakeholder dynamics and ensure pay practices align with strategic objectives while remaining publicly defensible.
The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates or its other professionals. FTI Consulting, Inc., including its subsidiaries and affiliates, is a consulting firm and is not a certified public accounting firm or a law firm. FTI Consulting is an independent global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political and regulatory, reputational and transactional. FTI Consulting professionals, located in all major business centers throughout the world, work closely with clients to anticipate, illuminate and overcome complex business challenges and opportunities. ©2025 FTI Consulting, Inc.
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