Click here
to download a copy of the Consultation paper.
The deadline for responses was 12th April 2004.
Internal Market Commissioner Frits Bolkestein said "Getting
directors' remuneration right means motivating directors
and rewarding achievement. 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. This consultation is a step towards developing
a Commission Recommendation aimed at achieving that balance.
So I encourage all interested parties companies, individual
and institutional shareholders and regulators - to respond.
We will listen to them."
The main issues on which the Commission is seeking responses
are:
- should the Recommendation invite Member States to take
regulatory measures to ensure that listed companies comply
with all its provisions? This would contrast with the
approach in some Member States which deal with the issue
in a non-legislative way, for example via a Corporate
Governance Code.
- should the Recommendation cover only listed companies
or also non-listed companies?
- how should the Recommendation define "directors"
given the wide range of board systems used in EU Member
States?
- how each EU listed company should disclose in its annual
accounts and annual report (or in the notes to the annual
accounts) the remuneration policy for directors for the
next financial year? Which elements for example the performance-related
elements of directors' remuneration, supplementary pensions
and contract policy should be included in that disclosure?
Should such information be an explicit item on the agenda
of the annual general meeting (AGM) and should it be submitted
to a vote?
- what information on the remuneration of individual directors
should be disclosed? Disclosure of the remuneration of
individual directors - both executive and non-executive
or supervisory - in the preceding financial year is important
so shareholders can assess the appropriateness of the
remuneration in the light of the overall performance of
the company. The consultation paper proposes that such
information should include at least information on salary
and other fixed elements of remuneration, share option
schemes and supplementary pension schemes. It also proposes
specific additional disclosure for non-executive and supervisory
directors.
- should variable remuneration schemes, under which directors
are remunerated in shares or share options, and any substantial
change in such schemes be subject to the prior approval
of the Annual General Meeting of Shareholders? Such approval
would relate to the scheme in itself, in other words the
system of remuneration and the rules applied to establish
individual remuneration under the scheme, rather than
to the remuneration of individual directors.
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