The UK government has published changes to the rules on executive pay to bring the UK regime into line with amendments to the EU Shareholders Rights Directive. As the UK already has a comprehensive regulatory framework governing directors' remuneration reports and policies, for the most part the amendments are limited and concern the detail of the existing rules. The changes come into effect on 10 June 2019.
The changes are contained in the Companies (Directors’ Remuneration Policy and Directors' Remuneration Report) Regulations 2019 and alter the existing UK regime as set out below.
Scope
- The existing UK regime only applies to quoted companies, that is, UK companies with equity shares officially listed in the UK or elsewhere in the EEA or dealt in on the NYSE or Nasdaq. The new rules extend the scope of the UK’s existing executive pay framework to cover unquoted traded companies, that is, any other UK companies with voting shares traded on an EEA-regulated market (such as the London Stock Exchange's main market, but not AIM). The government believes that, in practice, this will only capture a very small number of additional UK-registered companies, and these companies appear to comply already with the existing remuneration reporting requirements.
- The new rules also implement a Directive requirement that companies must additionally report on the remuneration of anyone in the role of the CEO or deputy CEO even if they are not a board director.