Detail of outcome
In response to this consultation we issued a second draft of the proposed changes to regulations governing directors’ remuneration reporting, to keep stakeholders and the public up to date with progress.
After taking these further views into account, Parliament approved final regulations, which come into force on 1 October 2013.
Directors’ pay: consultation on revised remuneration reporting regulations
On 20 June 2012, the Secretary of State for Business, Innovation and Skills announced a package of measures to address failings in the corporate governance framework for directors’ remuneration. This included:
- giving shareholders more power through binding votes, so they can hold companies to account
- boosting transparency so that what people are paid is clear and easily understood
- working with responsible business and investors to promote good practice and ensure reforms have a lasting impact
Taking forward the commitment to greater transparency, this consultation sought views on the draft regulations which will determine the content of directors’ remuneration reports. These regulations will revoke and replace Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (S.I. 2008/410). The draft regulations specify that the directors’ remuneration report is to contain two distinct parts:
- a policy report setting out all elements of a company’s remuneration policy and key factors that were taking into account in setting the policy. This part of the report will only be required to be produced when there is a shareholder vote on the policy
- an annual report on how the policy was implemented in the past financial year, setting out actual payments to directors and details on the link between company performance and pay
The purpose of this consultation was to seek evidence on the impact, costs and benefits of the proposals as well as detailed views on whether the draft regulations will achieve the government’s policy objectives. The deadline for responses was 26 September 2012.
This consultation is relevant to: companies and business organisations, executive and non-executive directors, shareholders and institutional investors, employees and employee representative organisations, academics, governance experts, lawyers and other advisors.
- BIS press release: Government strengthens reporting framework for directors’ pay