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Directors remuneration report - Coggle Diagram
Directors remuneration report
Directors of a quoted company to prepare a remuneration report in respect of each financial year
Companies Act Requirements
Specify the extent to which the directors remuneration report should be subject to an audit
The auditable part of a directors remuneration report is the part which includes the amount of each directors emoluments and compensation in the relevant financial year, details on share options, long term incentive schemes and pensions
A statement from the chair, to summarise major decisions, substantial changes and context of those changes and decisions
A report for each person who was a director during the year outlining payments and providing a single figure for each director
Total pension entitltments
Scheme interests awarded during the year
Payments to past directors
Payments for loss of office
Statement of directors shareholding and share interests
Performance graph and table
Percentage change in remuneration of CEO
If the company has >250 employees, ratio details of the pay of the CEO to the average pay of all UK employees during the period, calculated using one of 3 methods, explaining why this method was used and why it is appropriate to use that method
Relative importance of spend on pay
Statement of implementation of remuneration policy in the following year
Consideration by the directors of matters relating to directors remuneration
Statement of voting at general meeting
Listing Rule and Governance Code Requirements
Long term incentive schemes
Arrangements under which a director of the company has waived or agreed to waive any emoluments from the company or any subsidiairy and if so, details of such wiaver
Where a remuneration consultant is appointed the consultant should e identified in the annual report alongside a statement about any other connection the consultant has with the company or individual directors
There should be a description of the work of the remuneration committee in the annual report including
An explanation of the strategic rational for executive directors remuneration policies, structures and any performance metrics
Reasons why the remuneration is appropriate using internal and external measures, including pay ratios and pay gaps
A description with examples of how the remuneration committee has addressed the factors in Governance Code provision 40 (executive director remuneration policy and practices)
Whether the remuneration policy operated as intended in terms of company performance and quantum and if not, what changes are necessary
What engagement has taken place with shareholders and the impact this has had on remuneration policy an outcomes
What engagement with the workforce has taken place to explain how executive remuneration aligns with wider company pay policy
To what extent discretion has been applied to remuneration outcomes and the reasons why
The directors remuneration report is usually made up of three components: an annual statement by the chair of the remuneration committee; an annual report on remuneration (Implementation Report) and a remuneration policy (Remuneration Policy)
Each part is subject to different shareholder voting requirements
The Implementation Report must be put to an advisory shareholder vote at the GM at which the financial report is to be received, by ordinary resolution
The Remuneration Policy is subject to a binding shareholders vote at least once in every three years as an ordinary resolution
If shareholders do not approve a new proposed remuneration policy, it should be revised following consultation with the company's major shareholders and then put again to the vote in GM
The statement by the chair of the remuneration committee must include a summary of
The major decisions on directors remuneration
Any discretion which has been exercised in the award of directors remuneration
Any substantial changes relating to directors remuneration made during the year
The context in which those changes occurred and decisions have been taken
The Remuneration Policy is separate to the Implementation Report, this will be forward looking and provide information on remuneration and potential payments for each director
No remuneration or payment for loss of office can be paid unless they are consistent with the approve policy. On approval of a new or amended policy the previous policy ceases to have effect and accordingly any provisions being carried over from a previous policy must be restated in the new policy to be effective
When considering the adoption or amendment of the executive director remuneration policy and practices, the remuneration committee should address the following factors
Clairty
Simplciity
Risk
Predictability
Proportionality
Alignment to culture
Disclosure requirements for the Remuneration Policy
Future policy table
Approach to recruitment remuneration
Service contracts
illustrations of application of remuneration policy
For directors performance targets covering more than one year, an indication of the maximum remuneration receivable
Policy on payment of loss of office
Statement of consideration of employment conditions elsewhere in the company
Statement of consideration of shareholder views