From 1 October 2013, UK listed companies will be subject to new rules concerning the approval and disclosure of directors' pay. The changes are in part a reaction to the massive increases in directors' pay over the last decade and the well publicised examples of 'reward for failure'. The new rules have been the subject of much political discussion since they were first mooted in 2011, and represent the biggest change in the area of directors' pay since UK companies were first required to produce a directors' remuneration report in 2002. The key changes are:
- A new binding shareholder vote on a company's remuneration policy for directors (including the policy on terminations and remuneration packages for new appointments)
- The ability to recover from directors any payments made to them outside of the approved remuneration policy
- An advisory shareholder vote on the implementation of the director's remuneration policy
- Inclusion in the implementation report of a single figure for the total remuneration of each director
- Information on pay policy for other employees within the group and how that was taken into account when setting directors' pay
- Other new requirements intended to make remuneration disclosure more transparent and to show how remuneration is linked to company strategy and performance
The new rules will apply to UK listed companies with a financial year ending on or after 30 September 2013.
Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.
Circular 230 disclosure
To ensure compliance with requirements imposed by the IRS and other taxing authorities, we inform you that any tax advice contained in this article (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
If you would like to copy or otherwise reproduce this article then you may do so provided that: (1) any such copy or reproduction is for your own personal use or if it is made available to any third party it is done so on a free of charge basis; and (2) the article is reproduced in full together with the contact details, disclaimer and any logos as they appear on each article.