In July 2002, new legislation passed in the UK and implemented by the London Stock Exchange requires UK listed companies to put the Remuneration Report to the vote at their Annual General Meetings, effective for years ending on or after 31 December 2002.
Hence, in their comprehensive remuneration report to be presented for shareholder approval, UK companies generally describe the philosophy underlying director and executive remuneration, its main components in terms of fixed and variable parts, annual bonuses, the different long term incentive plans established by the company for its executives and employees, pension plans and other current or deferred remuneration, in cash or in kind for executives, the executive directors’ contracts as well as severance conditions and the company’s policy on external appointments. A separate table included in the remuneration report, also discloses the individual remuneration of directors (executive and non-executive) and the shares or options they have been awarded through the company’s existing plans, those exercised or lapsed and the amount of stock options or shares they hold at the end of the fiscal year under review.
This new requirement regarding disclosure is part of the effort of UK authorities to increase transparency and accountability in the sensitive field of executive remuneration, in order to restore investor confidence, seriously shaken following the accounting scandals that led many big US companies to bankruptcy.
At a time when the Swiss Stock Exchange Directive requests Swiss listed companies to disclose global figures concerning the remuneration of directors and executives, the UK (and US) examples show that much more can be done to improve disclosure.
02/21/2003
News
