Korn Ferry on SRD and Executive Pay

A key aim of SRD is to enhance transparency and give shareholders a say on firm’s executive compensation in all EU countries. From June 2019, companies that are listed and have registered offices within the EU will have to provide:   

      • Full and transparent reporting on the pay and performance of their directors
      • Shareholder vote on their director's remuneration policy and reporting at their AGM
Compliance with the directive will probably be necessary from FY 2019, with remuneration policies and reports first voted at 2020 AGMs.

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Companies covered by the SRD must prepare two documents for shareholders to approve:

  • A remuneration policy - to be approved at least every four years (binding or advisory vote to be determined by each Member State)
  • An annual remuneration report - to be approved every year (advisory vote).
The requirement will drive unprecedented public scrutiny and shareholder influence over executive pay. This presents a significant risk of negative media coverage and reputation damage for companies, directors and non-executive directors.

For some firms, SRD compliance will mean a greater reporting and communication burden for management and remuneration committees. For others, it will create a whole new set of governance obligations.
 


Preparing for SRD

The good news is that there are steps you can take to be ready for SRD, and there is time to implement them before it comes into force. However, the time and effort these measures will demand cannot be underestimated. Member states may still be finalising their legal implementation of the directive, but that does not mean you cannot begin preparing. Understanding the requirements of the Directive and likely local implementation will help to:

  • Cement an understanding in the business of the forthcoming requirements
  • Identify where current pay policy might fall short of the rules
  • Clarify what needs doing to ensure compliance

Why Korn Ferry?

Korn Ferry’s Executive Pay & Governance team offers a full range of support to boards, compensation committees and executive pay specialists.

Our pan-European team combines local knowledge with deep technical expertise in regulation such as SRD. We’re liaising with the European Commission, national regulators and implementers, and the investor community and have an in-depth understanding of their viewpoints and requirements. We can therefore help you to:
  • Comply with the legal requirements of SRD.
  • Align your remuneration policy with your business strategy.
  • Ensure that your disclosures demonstrate the effectiveness of your pay policy.
  • Gauge your shareholders’ views on your remuneration policy and reporting.
  • Recommend any necessary shareholder consultation and,
  • Guide you through the consultation process.

Our senior partners have broad experience with complex situations and are always available when needed. We do not believe in a uniform approach for determining top rewards and tailor our approach to your specific situation, taking market conditions into account.

Our methodologies and our knowledge about rewards have been developed and built up over a period of more than 70 years. Over this period, our partners and consultants have gained valuable experience with investors and in creating renumeration policies are a balanced reflection of the needs of senior management and other stakeholders.

Meet your SRD Experts

To find out more about how the SRD affects your business, and how we can help you prepare for it, please contact:
 
  • Tom Hilgers - The Netherlands - bio
  • Deborah Hall - United Kingdom - bio
  • Juhani Ruuskanen - Finland - bio
  • Michael Bursee - Germany - bio

CONTACT US