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What do I need to know about the new shareholders' vote on directors' pay?

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Published by a LexisNexis Corporate expert
Published on: 04 December 2013
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Shareholders are increasingly voicing their concerns at what they perceive as excessive pay increases and pay offs for directors that are not justified by company performance. In recent years companies have seen a significant rise in protest votes against remuneration practices at their annual general meetings. Against this backdrop, the Government has introduced sweeping reforms to the Companies Act 2006 (CA 2006) rules on directors' remuneration reporting and shareholder voting.

The reforms

The changes to the statutory directors' remuneration reporting regime are, in a nutshell:

  1. •

    the remuneration report is split into a section on directors’ remuneration policy and an annual report on its implementation

  2. •

    the policy section is subject to a binding shareholder vote

  3. •

    the annual report on remuneration is subject to an advisory shareholder vote

  4. •

    the content requirements for the remuneration report have been completely rewritten

  5. •

    all remuneration and loss of office payments must be consistent with the remuneration policy or be specifically approved by shareholders

  6. •

    directors will

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Jurisdiction(s):
United Kingdom
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Key definition:
Directors definition
What does Directors mean?

A director of a company is responsible for the day-to-day management of that company. The directors make decisions on behalf of the company in order that it can carry on its business.

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