UK: Executive remuneration – the proposals for shareholder votes

The Government (BIS) has published a consultation paper on its proposals to increase shareholder voting rights in relation to executive remuneration. 

The Government is consulting on four key measures to give shareholders more voting rights in relation to executive pay:

• an annual binding vote on future remuneration policy;
• the possibility of requiring higher than 50% majority to approve future remuneration policy;
• an annual advisory vote on the implementation of the remuneration policy over the previous year; and
• a binding vote on exit payments of more than one year's base salary.

The proposals would apply to UK incorporated listed companies.

The consultation paper closes for comment on 27 April 2012. The Government expects legislation on the new shareholder voting rights to come into force in spring 2013, with the provisions applying to reporting years ending after 1 October 2013.

We have prepared a briefing in which we consider the proposals and highlight some of the issues and implications if the proposals are implemented in their current form.  The briefing is available here.