Legal & General Group PLC (LSE:LGEN) has updated its pay policy to say it would back huge US-style bonuses being offered to asset managers this side of the Atlantic in a bid to attract talent.
As first reported by the Sunday Times, the pension and insurance giant updated guidelines over the weekend to acknowledge “necessary flexibility” in attracting talent.
This could include through “remuneration structures that are more closely aligned to US-style pay”, its new policy said, including share price-linked bonuses.
Such share price performance-linked bonuses have been slated for encouraging risk taking by asset managers and increasing pay inequality.
However, the larger rewards often offered in the US on the back of the schemes have also been blamed for struggles by London-listed firms to recruit the best executives.
UK companies have historically been bound in the reward schemes they offer by insistences by large investors, with Legal & General’s update marking a shift in tone.
Firms will indeed need to show “acceptable justification” on how larger bonuses would tie in with operations, according to Legal & General’s new guidance, alongside proving such rewards for bosses are “fair and appropriate” in relation to their wider workforce.