EUROPE – The European Commission wants institutional shareholders to be involved in a consultation on corporate directors’ pay and pensions.
The Commission said it is considering whether each EU listed company should disclose pay policy for directors to be applied for the next financial year in the annual accounts. This would include general information, as well as details about pensions and other pay.
A Commission consultation document has called for the disclosure of changes in a director’s accrued benefits when in a defined benefit scheme.
“Remuneration policy for directors is a major component of sound corporate governance,” the Commission says in the 13-page consultation document, “Fostering an Appropriate Regime for the Remuneration of Directors”.
“Getting directors’ remuneration right means motivating directors and rewarding achievement,” said internal market commissioner Frits Bolkestein.
“Getting it wrong breeds shareholder and public discontent and damages companies’ reputations and ultimately their performance.
“I believe we need to foster a regulatory framework which empowers shareholders and encourages companies to get their policies on directors’ remuneration right, without meddling in commercial decisions on individual remuneration.
“So I encourage all interested parties – companies, individual and institutional shareholders and regulators - to respond. We will listen to them.”
In October the European Parliament’s rapporteur on the transparency directive, Michael Skinner, called for details of corporate executives’ pension plans to be disclosed.
The Commission said responses would be taken into account in a recommendation to member states on this issue, set for September. It will monitor the application of the recommendation to see if any further regulatory action is required. The deadline for responses is April 12.