UK Guidance Update on Non-Executive Director Pay: What Listed Companies Need to Know
19 November 2025
- Contact Nicola Brown
- Client Director, Head of Incentives
- [email protected]
- +44 7781 146 162
The Financial Reporting Council (FRC) published updated guidance on 5 November 2025 supporting the UK Corporate Governance Code 2024 (the Code) on the remuneration of non-executive directors (NEDs).
This update does not alter the Code but adds clarity to the existing principle of “Comply or Explain”, offering companies’ flexibility to structure NED remuneration. The revised guidance applies to companies with UK-listed shares which apply the Code.
The update recognises that companies may wish to encourage NEDs to build personal shareholdings to foster alignment with shareholders and reinforce their long-term commitment to the relevant company.
Flexibility for boards
The guidance makes clear that boards have flexibility to pay NEDs a portion of their fees in shares, provided they maintain transparency about their rationale and approach. It clarifies that based on the particular circumstances of a company, a board may wish to explore alternative approaches to NED remuneration, whilst being mindful to maintain NED independence.
For the avoidance of doubt, the FRC says it continues to consider performance-related pay to be inappropriate, but that offering share options (provided they have a meaningful exercise price), or similar arrangements to acquire shares, may be appropriate.
The guidance also encourages companies to set out their arrangements in the annual report. A description outlining the rationale and process for allowing a portion of NED fees to be paid in shares, along with any associated restrictions on the sale of the shares, helps to ensure clarity for stakeholders.
Where shareholding requirements apply, it is important that the company put in place arrangements that will help monitor these holdings. Such arrangements should be established and agreed with each NED before any share-based fee arrangements are put in place.
Practical steps to consider
Companies could consider the use of a corporate sponsored nominee to assist in the management of their NED remuneration and disclosures as it is administratively simple, and fees can be automatically deferred into shares on behalf of the NEDs. Once the NED is free of any holding requirements, the legal title can be transferred to the individual.
How ZEDRA can help
Our flexible solutions are tailored to meet the unique needs of each client, whether it’s collaborating with share plan administrators, brokers, and custodians, or providing nominee services.
With a deep understanding of the evolving regulatory landscape and a proven track record in share plan governance, our team of experts is uniquely positioned to help companies navigate the opportunities presented by the updated guidance on NED remuneration.
Contact Head of Incentives, Nicola Brown, to find out more.