Executive Remuneration: Changes to Shareholder Voting Rights

    View Author March 2012
    The Department for Business Innovation and Skills has formally announced the Government’s detailed proposals for enhancing shareholder voting rights in the area of executive remuneration. There is a short period for consultation on the proposals, ending on 27 April.

    The proposals are part of a government response to the ever-increasing interest of shareholders, the press and the public in the remuneration of executives in UK quoted companies. These changes will affect all listed companies.

    These changes go further than expected – in effect all pay increases for FTSE directors may require prior shareholder approval.

    Of immediate concern is the proposal that all service contracts and other remuneration arrangements, such as long-term incentive awards that exist on 1 October 2013, must comply with the new regulations on termination payments. Companies should take the potential impact of the proposals into account in all remuneration decisions relating to directors (including the granting of awards under discretionary share plans) from today.

    Our briefing on the implications of today’s announcement sets out the legal and practical issues that will face quoted companies in dealing with the proposals and can be viewed in our full PDF.