• Register
Return to: Home > News > Regulation > FTSE 100 companies react to remuneration disclosure regulation

FTSE 100 companies react to remuneration disclosure regulation


More than three quarters of FTSE 100 companies have made changes to their remuneration arrangements in the past 12 months to address the UK government's new disclosure regulations, according to information published by Deloitte UK.

"This year we have seen an unprecedented amount of change to remuneration structures, undoubtedly prompted by more dialogue between companies and their shareholders following the new requirements on disclosure and voting," Deloitte remuneration team partner Stephen Cahill explained.

The government's remuneration disclosure reform came into force in October 2013. It requires quoted companies to disclose the director's remuneration policy and its implementation. The reform also specifies that the shareholders have a binding vote on a resolution to approve the directors' remuneration policy.

According to Deloitte UK, a third of companies did not increase salaries for chief executive directors as a possible result of the reform. Also, salary increases were modest with a median increase of 2.5% and fewer companies have given directors increases in excess of 3% (16% this year compared with 25% last year).

"Restraint has been particularly apparent in the top 30 companies where 44% of executive directors received no increase," Cahill added.

To align the interests of directors and shareholders, the companies also focus on increasing the shareholding requirements for directors and introducing simpler remuneration structures, Deloitte said.

Accordingly, a quarter of companies have increased the shareholding required by directors and in over a quarter of performance share plans, the participants will not receive any shares for five years.

"There is an expectation that directors will hold sufficient shares to create real alignment with shareholders," Cahill continued.

"In the past year we have seen over a quarter of companies increase the minimum requirements, resulting in a median requirement to hold shares with a value of 200% of salary, compared with 150% last year."

According to Deloitte, 13 companies removed the bonus share matching plan to simplify the remuneration structure and as for the bonuses, the median potential bonus and the actual bonus payout amount in the top 30 companies have decreased.

"A key expectation of shareholders is that companies will be able to claw back incentive payments and share awards where they were clearly inappropriate," Cahill explained.

"This is rapidly becoming normal and accepted practice and provisions allowing sums already paid to be recovered are now in place in over 40% of companies," he continued.

Most companies received a high level of support for both the remuneration policy and the annual remuneration report trough the shareholders binding vote, Deloitte stated, with 79% of companies received more than 90% of votes in favour of the remuneration report.

"Shareholders are taking a robust position where policies and practices are not considered to be in line with best practice," Cahill added.

Related article:

UK FRC canvasses opinion on directors' remuneration

Related link:

Deloitte UK

Top Content

    Addressing tax challenges and the digitisation of the economy

    As the economy becomes even more globalised through digital sources, the tax systems currently in place need to be scrutinised to examine whether they are still fit for current and emerging business models. Joe Pickard reports on the OECD’s approach to this issue.

    read more

    Primary financial statements: a game changer in reporting?

    International Accounting Standards Board chair Hans Hoogervorst delivered a speech at the Seminario International sobre NIIF y NIF, organised by the Consejo Mexicano de Normas de Información Financiera in Mexico. The Accountant presents the highlights.

    read more

    FASB readies standards for the netflix generation

    The US Financial Accounting Standards Board (FASB) has updated its accounting standard for entertainment, with a specific eye on keeping up to date with how episodic content, such as television programmes, is consumed in the modern world. Jonathan Minter reports.

    read more

    Brexit: why it takes two to tango

    Former TA editor Vincent Huck, now editor of Insurance Asset Risk, looks at why Brexit might unleash geopolitical intrigue in Europe’s accounting standard-setting scene – and why IFRS 17 will be an incredible source of opportunity for firms in the coming years.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.