UK - More than a third (37%) of companies within the FTSE 100 propose allowing their shareholders to vote on directors' remuneration in 2002, according to a survey report published this week by company secretarial consultants, Edis-Bates Associates.
The survey also reveals that the number of FTSE 100 companies fully complying with the Combined Code is set to rise from 35% in 2001 to 56% in 2002.
FTSE 100 company secretaries were questioned on their companies’ attitudes towards key corporate governance disclosures to be made in the coming reporting season. As part of the survey, the 2001 report and accounts of the FTSE 100 were analysed and the views of the top institutional investors canvassed. The report focuses primarily on directors’ pay, social responsibility statements and political donations, but also covers other current corporate governance issues.
Two-thirds of FTSE 100 companies claim, according to the report, that they have a strong commitment to socially responsible investment, whilst 58% have appointed a director responsible for health and safety.
The survey’s author, Jon Edis-Bates, said: The trend is clear. The number of FTSE 100 companies offering shareholders a vote on directors’ pay this year is expected to be three times last year’s figure. It may in fact be higher following the release just before Christmas of draft regulations requiring quoted companies to seek shareholder approval from 2003.
In response to the findings, TUC general secretary John Monks said: Companies seem to be anticipating the change in the law that will compel them to put directors' pay to their shareholders. This is to be welcomed, but the new system will only bite if shareholders and fund managers take an active role by casting their votes. A key test they should apply is whether company staff are represented on the remuneration committee.
On December 18, 2001 the DTI published a consultative document entitled ‘Directors’ Remuneration’, incorporating draft regulations applying to quoted companies and scheduled to be effective in 2003. Key provisions include:
* Companies must seek shareholder approval of the new-style directors’ remuneration report at their AGM. The vote is to be advisory only.
* The directors’ remuneration report must include additional disclosures including: a performance graph must be included showing how well the company has performed against its peer group or index; the report will have to state whether the board accepted the remuneration committee’s recommendations on pay without amendment; any advisers to the remuneration committee must be named.
Copies of the report can be obtained by emailing [email protected]
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