UK Govt Proposes Directors' Comp Transparency Laws

October 19, 2001( - In a bid to strengthen the link between compensation and performance at UK companies, shareholders are to be given the right to vote on directors' pay.

UK Trade and Industry Secretary Patricia Hewitt announced that new legislation will be introduced, which will require listed companies to:

  • publish a report on directors’ remuneration as part of the company’s annual reporting cycle,
  • disclose within the report details of individual directors’ remuneration packages, the role of the board’s remuneration committee, and the board’s remuneration policy as well as specific requirements relating to the disclosure of information on performance, and
  • include an annual resolution to shareholders on the remuneration report

The legislation aims to prevent directors from being lavishly rewarded for lackluster performance, to the detriment of their companies and shareholders.

The Government will introduce secondary legislation to implement these new requirements in the coming Parliamentary session.

– Camilla Klein