‘The dialogue on remuneration will be more open and intensive’

Shareholders’ Rights Directive under scrutiny

"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%."

Change of viewpoint

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."