After several drafts over the months, the final version of the new UK legislation relating to the contents of directors’ remuneration reports has been published: final remuneration regulations.
There are several changes from the “near final” draft published in June 2013. Most of these are not substantive, but two of them are:
- In the sections relating to the disclosure of payments to past directors (regulation 15) and payments for loss of office (regulation 16), payments “not of significant economic value” could be excluded. These words have been replaced by “below a de minimis threshold set by the company and stated in the report”. This obviously increases certainty, but sets another challenge for companies – to assess what threshold will be low enough to be acceptable to shareholders.
- The provisions relating to awards made to directors during the financial year (regulation 14) have been changed the most. The meaning of the “face value” of an award has been clarified. The disclosure must now state which of two possible share prices has been used (share price at grant or the average price used to determine the number of shares awarded) and, if the former is used, the share price and the date of grant. The requirement to disclose “the maximum percentage of the face value which could be received where that amount is more than the face value” has been removed.
It will be interesting to see what the first companies to have to comply with the new regulations – quoted companies with a year end of 30 September – come up with later this year.