The introduction of long-term share-based incentives for executives at Weir Group, one of the UK’s largest engineering outfits, “could be a model for other companies”, according to the chairman of the group’s remuneration committee.

Writing in the Financial Times, Clare Chapman describes how Weir reformed the remuneration policy so executives are given shares that pay out over seven years, minus the three-year performance conditions included in many long-term incentive plans (LTIPs). The article comes after a shareholder vote this week backed pay changes at Weir.

“By making executives significant long-term shareholders, this pay policy exposes them to the same risks that investors face. It will be more effective at aligning executives’ awards with our business strategy and long-term shareholder interests,” writes Chapman.

She describes long-term shareholders providing “real insight” during the process of rewriting the pay arrangements.

However, Chapman observes that not all remuneration committees are “so lucky”.

She says some institutional investors have “fixed views” on pay, while others with big portfolios find it difficult to communicate with individual companies.

Chapman says pay reform “only works when chief executives take the lead”, even if it means delaying their own rewards.

She says the vote backing the remuneration committee’s new pay scheme “suggests attitudes are changing” towards pay.