UK: Reporting On Executive Pay – The New Regime At A Glance

Last Updated: 28 October 2013
Article by Kate Ball-Dodd, Andrew Stanger, Kirsty Payne and Annabel Evans

Keywords: executive pay, Companies Act, capital markets, executive remuneration, accounting regulations,

The much-heralded changes to the rules on the reporting of directors' pay are now in force. The new rules (principally set out in new accounting regulations which form part of the Companies Act regime on the contents of company reports and accounts) apply to companies with financial years starting on or after 1 October 2013 and bite first for companies with a 30 September year end. Here is our "at a glance" comparison between the old and new regimes. It includes key comments from the Directors' Remuneration Reporting Guidance issued by the GC100 and Investor Group on 12 September 2013 (the "Guidance").



Which companies are affected?

Quoted companies (not AIM)

No change. Applies to quoted companies (not AIM)

What documents do you have to produce?

Since 2002, quoted companies have had to include a directors' remuneration report in their annual report, containing both forward and backward looking information on executive pay.

The overarching requirement to issue an annual directors' remuneration report remains. But this must now contain distinct sections setting out:

  • the company's overall remuneration policy;
  • how that policy has been implemented during the relevant financial year (implementation report).

Strictly, the annual report only has to set out the directors' remuneration policy in years when that policy is to be voted on by shareholders (see below). But it will be good practice to include it each year for reference.

In the remuneration report, a forward looking policy statement focussed mainly on performance conditions. No statutory sanctions for making payments to executives outside the policy.

The remuneration policy must set out the company's approach to all categories of executive remuneration including, importantly, payments for loss of office.

Significantly, payments to directors outside the policy are prohibited once the policy has been approved by shareholders. If a policy vote fails, the company is permitted to continue making payments in line with a previously approved policy (if any).

The policy must give illustrations of the level of payments that might be made for different standards of performance – so that the information in it is meaningful and understandable.

In the remuneration report, a backward looking element including prescribed information on salaries, bonuses, benefits etc. paid to directors in the relevant financial year.

The implementation report must set out how the remuneration policy has been implemented during the relevant financial year. The detailed contents requirements have been amended and augmented.

As well as details of pension entitlements and LTIP awards, it must contain a single total figure for each director of all sums paid to him or her (including salary, pension and other benefits and bonus and incentive awards) in the relevant financial year. This is designed to ensure consistency of information across companies.

What do shareholders vote on?

Advisory vote on directors' remuneration report every year.

The remuneration policy is subject to a binding shareholder vote, at least once every three years (or earlier if amended before then).

The implementation report continues to be subject to an advisory vote every year. But the vote now has teeth. If it is not passed in any year, this triggers a requirement for the remuneration policy to be put to a shareholder vote the following year, whether or not it would otherwise have been due for approval.

While companies can choose to put their remuneration policies to shareholders more frequently, the GC100 and Investor Group is strongly in favour of ensuring the remuneration policy is only put to shareholders triennially i.e. it should be "intended to stand the test of time".

Where there has been a significant percentage of votes against either of the remuneration resolutions at the last AGM, the company must disclose the reasons (if it knows) and describe any actions it has taken in response. The Guidance suggests 20% is a "significant percentage" for these purposes.

When does remuneration policy take effect?

Policy statement not binding, so not relevant.

In the first year, companies may choose when they want their remuneration policy to take effect (e.g. immediately on approval or delayed until the start of the next financial year). The Guidance recommends the policy should take effect as soon as it is approved (although in the first year this will mean the targets already set for directors at the beginning of the financial year are subject to approval).

In the first year, companies will need to focus carefully on getting their remuneration policy approved before the statutory long stop date (explained below). If the first ever policy vote fails at the company's annual general meeting, there will be no fall back policy from previous years. The company would have no choice but to call a further general meeting to put a (revised if necessary) remuneration policy to shareholders.

The long stop date effectively requires companies to have an approved remuneration policy in effect by the end of the company's first financial year starting on or after 1 October 2013.

Can you exclude confidential information?

Information only has to be included if and to the extent that it is "contained in the company's books and papers", or publicly available or the company has the right to obtain it.

No need to include information about performance measures or targets that is, in the opinion of the directors, "commercially sensitive in respect of the company".

The Guidance suggests that a measure or target may be "commercially sensitive" if its disclosure is "likely to damage the company's commercial interests".

What are the sanctions for non-compliance?

Potential liability to compensate the company for untrue or misleading statements or omissions for directors who knew or were reckless as to whether they were untrue or misleading.

Directors' potential liability for inaccuracies or omissions remains.

There are also new penalties for making payments to executives outside an approved remuneration policy. Any director authorising the payment may have to indemnify the company for any loss.

Is the shareholder resolution ordinary or special business for the purposes of the Listing Rules?

The shareholder resolution approving the directors' remuneration report is ordinary/routine business and so does not have to be accompanied by an explanatory circular or require any pre-vetting by the Financial Conduct Authority.

We do not expect there to be any change of status as far as the shareholder resolution approving the remuneration report is concerned. We also expect resolutions approving remuneration policies to qualify as ordinary/routine business for these purposes.


Kate Ball-Dodd, corporate and securities partner, comments: "Key to the approval and successful operation of a remuneration policy is the balance struck between flexibility, so that the company is not prevented from making the payments it needs to make to recruit or retain the right people, and certainty, so that investors can be satisfied all payments will be appropriate. The suggestion in the Guidance that companies might consider including an "emergency" discretion in remuneration policies for use in genuinely unforeseen and exceptional circumstances may well prove helpful for many companies."

Andrew Stanger, partner in our employment and benefits group, comments that "To take a particular example, leaver provisions in long term incentive plans will need to be covered in the policy in sufficient detail to ensure that payments made on the departure of a director do not fall outside the policy as unauthorised payments for loss of office".

Originally published 21 October 2013

Learn more about our Capital Markets practice.

Visit us at

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2013. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.