Directors' Remuneration | New regulations in force

The Companies (Directors' Remuneration Policy and Directors' Remuneration Report) Regulations 2019 came into force on 10 June 2019, implementing articles of the Revised Shareholder Rights Directive.

On 14 June 2019, BEIS published its Frequently Asked Questions on the new Regulations, setting out how and when companies will be affected by the new reporting requirements. This includes a  summary of the main new and amended requirements which will be helpful for quoted and traded companies covered by the new Regulations, in particular as follows:

Remuneration policy:

• Certain additional detail must be provided on when shares that have been indicatively awarded to directors may be granted or exercised, in particular by providing information on vesting periods, and on any holding or deferral periods.
• The policy must provide an indication of the duration of directors’ service contracts.
• The policy must set out the decision-making process through which it has been determined, and highlight key changes compared to the previous policy.
• If the company loses the shareholder vote on the policy, it must bring a revised policy to another vote within a year.

Remuneration report:

• The report must compare the annual change of each director’s pay to the annual change in average employee pay, over a rolling five year period.
• The report must show the split of fixed and variable pay for each director, as two additional columns to the existing ‘Single Figure’ table.
• The report must set out any changes made to share options granted or offered and the main conditions for the exercise of these rights, including the exercise price and date, compared to the previous year.

Further detail on the new requirements and amendments to existing legislation are set out in the Frequently Asked Questions.

Separately, on 22 July 2019 the GC100 and Investor Group published an updated version of its Directors' Remuneration Reporting Guidance 2019.  This has been revised given the impact of the new Regulations, and will continue to be reviewed and updated from time to time.