Pearson has issued a statement saying it will only pay salaries and bonuses in excess of its normal limits in “exceptional” circumstances, following discussions with its shareholders.
Yesterday (9th April), just weeks after the company released its 2013 results, David Arculus, chairman of the remuneration committee, issued a statement to shareholders about Pearson’s remuneration policy.
In it he said that after further discussions with shareholders the remuneration committee “wishes to clarify the basis on which certain elements of Pearson’s policy will apply if approved and, in particular, wishes further to define and limit when and how remuneration arrangements outside the normal terms of the policy and remuneration in excess of the normal limits set out in the policy might be applied”.
In the statement Arculus said an exception which allowed Pearson to put in place remuneration arrangements outside those laid out in its policy would only be used in “exceptional or genuinely unforeseen circumstances”.
“The committee considers that these circumstances would arise highly infrequently, if at all, in the lifetime of the policy,” the statement continued.
The remuneration committee would also “ensure that the value of the remuneration arrangement put in place in reliance on this discretion would fall within the normal financial limit (as stated in the policy) for the element of remuneration to which the arrangement relates”.
Pearson also said its incentive plan would not “be used for the benefit of such executive directors other than where it is appropriate to compensate a new director on a ‘like-for-like’ basis for incentives foregone at a previous employer”, and that Pearson’s discretion to award salary increases, allowances and benefits outside of the limits set in its policy would only be “exercised in exceptional circumstances other than in the case of increases in the cost of benefits that are outside Pearson’s control and changes in benefit providers”.
Pearson’s 2013 results showed profits were down 9% for the year to £736m, with the drop blamed on fewer people enrolling in higher education in the company's core US market and the impact of curriculum changes in both the US and the UK.