government to get tough on directors’ payFebruary 2002
Details of new requirements proposed for reporting on directors’ remuneration have been outlined by the UK government.
Draft regulations posted on the Department of Trade and Industry’s web site would require quoted companies to produce a directors’ remuneration report as part of their reporting cycle.
Key elements of the report would include:
details on remuneration policy, including information on the company’s performance criteria for long-term incentive schemes
one or more performance graphs showing how the company has performed over a five-year period in comparison with selected competitors
more information on directors’ contracts and compensation payments.
The regulations which, if adopted, will apply to financial years ending on or after 31 December 2002, will also introduce a requirement for an annual shareholder vote on any directors’ remuneration reports.
Consultation on the draft regulations ends on 15 March. The government then aims to introduce them in this parliamentary session.
The latest annual corporate governance review from Pensions and Investment Research Consultants has revealed a ‘dramatic’ upward shift in directors’ pay at large UK companies, despite warnings from the government that it disapproves of the trend.
Average executive salaries rose over the past year by 12.8 per cent in FTSE100 companies and average total cash remuneration increased by 20.2 per cent, Pirc found.
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