BIS Consultation Document issued on 14 March 2012 relating to Executive Pay and shareholder voting rights. The proposals follow the announcement on 23 January 2012 of a package of measures to address failings in the corporate governance framework for executive remuneration including :
- Greater transparency in directors’ remuneration reports;
- Empowering shareholders and promoting shareholder engagement through enhanced voting rights;
- Increasing the diversity of boards and remuneration committees;
- Encouraging employees to be more engaged by exercising their right to Information and Consultation Arrangements; and
- Working with investors and business to promote best practice on pay-setting.
The consultation document provides more detail on a proposed model which will give shareholders greater influence on the issue of executive remuneration through enhanced voting rights. The main components of this are:
- An annual binding vote on future remuneration policy;
- Increasing the level of support required on votes on future remuneration policy;
- An annual advisory vote on how remuneration policy has been implemented in the previous year; and
- A binding vote on exit payments of more than one year’s base salary.