Today sees the publication of PwC Nederland’s annual pay survey at listed companies, the Executive and non-executive remuneration survey 2019. What does the survey reveal and how can interested parties participate in the breakfast seminar on Wednesday 30 October? We speak to Janet Visbeen – who leads the discussion on remuneration for PwC in Europe, the Middle East and Africa – and Frank van Oirschot, who like Janet advises many AEX funds on their remuneration policies.
"In our survey we provide an overview of the remuneration practices at companies listed on the AEX, the AMX or the AScX, the local markets", says Frank van Oirschot. "We notice that directors and supervisory board members are pleased with this annual overview as it serves as input for any adjustments to their own remuneration policy. The choices made in setting this policy are increasingly coming under scrutiny from stakeholders, such as major investors and society in general."
Janet Visbeen: "With the implementation this year of the Shareholders’ Rights Directive (SRD) in Dutch law, transparency of management and supervisory board pay will increase further. Prior to the annual general meeting of shareholders (AGM), works councils will be issuing public advice on the remuneration policy and shareholders and proxy voters will have greater influence in adopting or rejecting the policy at the AGM. We take a closer look at that in our publication."
There is a real sense of urgency to start implementing the requirements of the guideline, according to Van Oirschot: "Because the legislative proposal will have an immediate effect, all listed companies will need to produce a new-style remuneration report on 2019 in early 2020. Moreover, many listed companies will need to draw up a new remuneration policy to be approved at the 2020 AGM if their current policy is older than three years of if the current policy fails to meet the new requirements. To get the policy approved, they will need at least 75% of the votes. Support is currently still at 50%."
Visbeen considers the implementation of the SRD as a change of viewpoint: "A change in the viewpoint of the management board towards that of the employees, shareholders and society. The dialogue on remuneration will be more open and intensive. The new regulations are a perfect opportunity for companies to clearly set out actual pay levels, the policy and reporting."
"The shift towards the viewpoint of stakeholders has a number of other consequences that we describe in our publication", says Van Oirschot. "For example, shareholders and investors are increasingly interested in the link between pay and performance. Apart from the company's financial performance, stakeholders are also looking more and more at non-financial performance, such as sustainability and the social and physical environment. The challenge for companies is to align non-financial elements with their strategy and link them to their remuneration policy. The Sustainable Development Goals (SDGs) of the United Nations provide a great framework to follow."
Visbeen: "Other topics covered in the remuneration survey are the internal pay ratio, which expresses the pay ratio between management and employees, and the legislation and regulations for the remuneration policy in the financial sector. We also discuss the legislative proposal on equal pay for equal work, which will apply to all employees, and set out concrete steps that organisations can take."
Van Oirschot: "Given the tight labour market, the demand for new, digital skills and the advent of more flexible employment relationships, work in the future will certainly be different from today. Remuneration, for management and other employees, is one of the core elements for companies in shaping that future. With our annual remuneration survey, we wish to share the latest insights so that companies can employ them in formulating their own remuneration strategies."
PwC is organising a breakfast seminar on Wednesday 30 October 2019 where the remuneration survey will be discussed in greater detail. Van Oirschot: ‘At our Amsterdam PwC office, we will be examining the trends, the changing legislation and views from society regarding pay levels of management and supervisory board members. We want to explain what practical steps organisations can take to satisfy the new requirements and we are of course curious to learn how the attendees are dealing with the increasing influence of shareholders on remuneration. Those interested are more than welcome to register for this network meeting.’
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