The Advisors' Blog

– Subodh Mishra, ISS Governance Exchange

European Commission Internal Markets Head Michel Barnier says he will push for European Union-wide legislation mandating say-on-pay, Reuters reported. The public announcement follows a March 3 vote by Swiss citizens backing a measure to radically curb executive pay, and a provisional agreement last week between EU regulators and lawmakers to limit bank bonuses at no more than two times salary.

According to the report, the EC, which writes the first draft of EU law known as directives, will propose a mandatory say-on-pay vote applicable across all 27 member states by year’s end. “I am in favor of making shareholders more responsible on pay. I am currently working on EU legislation that would give shareholders a mandatory say on remuneration,” Barnier told Reuters March 6.

A spokesman for the Commission said Barnier’s proposal would aim to empower shareholders rather than to limit pay, Reuters reported. Any legislation is also likely to be part of a broader “action plan” as laid out by the EC in December. Action plan goals include improving transparency on remuneration policies and individual remuneration of directors alongside granting shareholders the right to vote on the remuneration policy. The past week’s developments may prompt consideration of a binding vote on forward looking pay policies, which is now in the works for U.K. companies, pending passage of related legislation later in the year. The March 3 Swiss referendum, backed by more than two-thirds of voters, put in place some of the most rigorous pay curbs globally while empowering shareholders on various elements of Swiss executive remuneration.