The Department for Business, Innovation and Skills’ (BIS) consultation exercise on revised executive remuneration reporting regulations has closed.
The consultation, Directors’ pay: revised remuneration reporting regulations, includes draft regulations setting out the proposed form and content of the director’s remuneration report.
The proposals of the report, if enacted, will give shareholders a binding vote on salary and bonus arrangements every three years, though there will be a vote annually unless organisations leave their pay policies unchanged.
The reforms will, if adopted unchanged, also mean that organisations will have to:
- Show executive pay as a single figure (rather than being split in the accounts between salary, bonuses, and so on).
- Produce an annual statement saying whether performance targets are met.
- Set out their approach to exit payments to directors as part of their pay policy. This approach, rather than the individual exit payments themselves, will then be subject to a binding vote.
Philip Davies, a partner at international law firm Eversheds, said: “The draft regulations will apply to all quoted companies. It is proposed that the provisions will take effect for companies with reporting years that end after October 2013.
“Discontent over top pay and bonuses has been growing for some time and, at recent annual general meetings’ (AGMs), investor disquiet has been evident.
“These proposed reforms are intended, if they come into effect, to promote transparency and empower shareholders to have a say in salary and bonus arrangements for top executives.