AIM’s new approach to director pay: less “fair and reasonable”, more governance
10 Dec 2025
5 min read
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We recently posted how the LSE is repositioning AIM for the future.
Importantly, AIM is also rewiring how it treats directors’ pay.
AIM Regulation is now prepared, in appropriate cases, to waive the requirement for a Nominated Adviser ("Nomad") to give a formal “fair and reasonable” opinion under AIM Rule 13 on non-standard directors’ remuneration where (and only where) the Nomad is satisfied there are reasonable commercial protections for the company - for example, robust good/bad leaver and clawback terms.
The direction of travel is clear: less box-ticking on individual pay events, more weight on the underlying remuneration framework. The approach is already being applied via waivers/derogations and is expected to be hard-wired into the AIM Rules following consultation in the first half of 2026.
Equally important is what is not changing: the AIM Rules still do not require shareholder approval for new incentive plans. Whether you go to a vote remains a governance and investor-relations question, not a new regulatory obligation.
Status at a glance
What has changed now?
AIM Regulation is, on a case-by-case basis, disapplying the requirement for a Nomad “fair and reasonable” opinion on non-standard directors’ remuneration where the Nomad is satisfied the contractual terms provide reasonable commercial protections for the company (for example, good/bad leaver mechanics).
What is coming next?
The London Stock Exchange intends to codify this more proportionate treatment in the AIM Rules after a formal consultation in H1 2026.
What has not changed?
Rule 13 itself still applies. The related-party regime is not being switched off; what is being removed is the additional requirement for the Nomad to opine that the terms are “fair and reasonable in so far as shareholders are concerned.”
There is still no AIM Rule requirement to obtain shareholder approval for LTIPs, option plans or other incentive arrangements. Shareholder approval is a strategic choice; AIM is not importing a Main Market-style mandatory vote.
What has actually changed in practice?
Under the traditional approach, non-standard director remuneration - think buy-out awards, one-off retention packages, enhanced LTIP opportunities or bespoke severance terms - frequently tripped AIM Rule 13 as a related-party transaction.
That typically meant:
The Nomad had to state that the arrangements were “fair and reasonable in so far as shareholders are concerned”.
The independent directors had to make a public statement to the same effect, having consulted the Nomad.
Two consequences followed:
The Nomad was dragged into a quasi-Remuneration Committee role, expressing a judgement on quantum and structure rather than focusing on their core finance role.
Routine but time-critical hiring and retention decisions for growth companies became slower and more expensive than they needed to be.
The new approach flips the emphasis:
If the Nomad is satisfied that the directors’ package sits within a documented remuneration framework with sensible protections for the company, and
The only “transaction” is the operation of that framework for a director,
then no separate “fair and reasonable” opinion is required, even though Rule 13 technically still applies in the background.
Put differently: the framework becomes the control point; individual applications of that framework are no longer treated as mini-transactions needing their own fairness opinion.
What counts as “reasonable protections”?
There is no published checklist, but a clear pattern is emerging. It is useful to think in two layers: must-have controls and enhancing features.
Must-have controls
These are the basics a Nomad will expect to see before relying on the framework:
Good leaver / bad leaver matrix:
Objectively defined good leaver categories (death, disability, redundancy, termination not for cause, and so on).
Clear bad leaver outcomes: forfeiture of unvested awards and, where appropriate, vested but unexercised awards.
Structured vesting and exit mechanics:
Time-based and/or performance-based vesting linked to value creation.
Clear, pre-agreed rules on what happens on a sale, IPO, delisting or scheme, avoiding automatic, unconditional windfalls.
Malus and clawback:
Documented triggers (misconduct, misstatement, risk/compliance failure, serious reputational harm).
A credible ability to reduce, cancel or recover variable remuneration across cash and equity.
Service agreement discipline:
Market-standard notice and severance with mitigation.
No uncapped guarantees or change-of-control “jackpots” detached from performance.
Enhancing features
Not mandatory, but very helpful in practice:
A single coherent remuneration framework for directors and senior management, rather than a patchwork of bespoke deals.
Shareholder-approved plans as the primary delivery mechanism, not because AIM demands a vote, but because where shareholders have signed off the structure once, its operation is easier to treat as business-as-usual under Rule 13.
Negative discretion for the Remuneration Committee to dial back outcomes in anomalous situations.
A clear disclosure narrative in annual reporting and RNS announcements on how outcomes link to the framework.
The more your documentation looks like this, the easier it is for the Nomad to rely on the framework and step away from giving a fairness opinion on each non-standard package.
Who needs to do what? (At a glance)
Boards / Remuneration Committee's
Assume that you own the fairness question; the Nomad is going to be focused on its primary directive - finance - not opining on pay quantum.
Audit and tidy the framework: harmonise good/bad leaver definitions, align LTIP and bonus rules and close gaps in malus and clawback.
Decide when you want the discipline and signalling value of a shareholder-approved plan, recognising that AIM is not forcing a vote but will reward a clean, coherent structure.
Nomads
Recalibrate your Rule 13 playbook: move from default “fair and reasonable” opinions on non-standard remuneration to a structured review of the issuer’s remuneration architecture.
Document the circumstances in which you are prepared to say there are “reasonable commercial protections” and no fairness opinion is required.
Investors
Expect fewer Rule 13-style announcements about individual pay decisions and more emphasis on the underlying framework and disclosed outcomes.
Focus on whether the architecture and outcomes look aligned with long-term value, rather than whether the Nomad has blessed every award.
Final thoughts
The big picture point is that AIM is being nudged back towards its original purpose: a proportionate, growth-focused market that still protects investors, but does so through sensible governance rather than unnecessary process.
For boards and Remco's, the trade-off is attractive: fewer regulatory hoops on pay in exchange for a stronger, cleaner remuneration framework that investors can understand and Nomads can rely on.
At Burges Salmon, we help AIM-quoted companies and their advisers navigate evolving remuneration rules with clarity and confidence - combining technical expertise with practical governance solutions that work for growth businesses.