The Advisors' Blog

– Broc Romanek, CompensationStandards.com

Recently, I blogged about the UK moving closer to a binding say-on-pay framework – and I have posted memos on this development in our “International” Practice Area. Also note this Reuters article entitled “Long “shareholder spring” seen harming UK firms.”

In response, I got queries from members confused about how the UK framework works now – and in our countries that have say-on-pay. Cristina Ungureanu helps us by noting that this confusion may be caused by two aspects:

– Particularities of the corporate governance / board models in various EU jurisdictions (one-tier, two-tier, mixed models).
– Differentiating between vote on the remuneration report and vote on the remuneration policy

Here are the existing frameworks in other countries:

– United Kingdom: The vote is on the entirety of the remuneration report, covering both retrospective payments and policy, as well as future remuneration policy. The remuneration voted on is therefore applicable to the entire board, which includes executive and non-executive directors (in the UK, the board has a one-tier structure).

– Nordic Countries: The Nordic corporate governance structure lies between the Anglo-Saxon one-tier and the continental European two-tier model. Further, a separation between the board and executive management is required. The same person cannot be CEO and chairman of the board. Hence, the great majority of the Nordic listed companies have entirely or predominantly non-executive boards. The AGM must decide on the fees and other remuneration for each director of the board. The nomination/remuneration committee makes the remuneration recommendations, which are then presented in the notice of the AGM. As to the executive committee members, the Board must present proposed guidelines for their remuneration to the AGM for its approval; therefore the vote on executive pay is on the future remuneration policy.

And here is news about governance developments in Asia, courtesy of Towers Watson.