The ABI (Association of British Insurers) and NAPF (National Association of Pension Funds) have updated their joint statement on executive contracts and severance. The statement is an update of a document first published in 2002.  The bodies have been very successful in encouraging listed companies to reduce the notice period of directors' contracts of employment.  Further pressure will be applied to reduce the current standard notice period of 12 months to a lesser period. Companies will have to clarify that only base salary is being compensated when a director leaves as a result of poor company performance.  These changes are the UK response to the very large payments recently made to US CEOs of large banking organisations who left after significant write-offs were made.

The ABI has advised Strategic Remuneration that disclosure in the Remuneration Report on a company's website will be adequate to satisfy Principle 2.7.