UK GC100 Amended Guidance – What’s Changed?

The GC100 and Investor Group has published an updated version of its guidance to the UK Directors’ Remuneration Reporting (DRR) regulations, which are now in force.  The original document was published in September 2013, as was our alert on that version.

So, what has changed in less than two months? Well, not a great deal… and most of the amendments are helpfully signposted by footnotes.

• There’s some useful clarification on the interaction of grandfathered provisions and the future policy table.  The guidance now states that, even if a company intends to rely on the grandfathering provisions for arrangements entered into before 27 June 2012, if remuneration may be paid under those arrangements, they must be set out in the future policy table.  This is not a surprise – the grandfathering provisions provide an exclusion from the penalties for making payments in breach of the shareholder approved policy, not an exclusion from the requirement to disclose.  Quite how the express disclosure of these items will be received by shareholders (who are of course required to vote on the table) remains to be seen, although the amendment emphasises the need to ensure appropriate dialogue with shareholders before the DRR is published.
• Pension related benefits in the year must be disclosed as part of the single figure table – the amended guidance essentially restates the regulations’ requirements.
• The notes to the pension disclosure must set out prospective pension entitlements, and the guidance now suggests that companies may wish to consider summarising these rights as the transfer value of the entitlement.  This would, it is hoped, make it easier for investors to compare different arrangements.  The guidance now also suggests that, if trustee or company consent is required for any earlier retirement, this should be disclosed.  Indeed, anything discretionary and “outside” of the company’s intended practice or the pension scheme’s normal practice should be highlighted.
• The commentary around the valuation method of options which are to be included in the scenario charts has been adjusted, basically confirming that the need to value options and confirm the valuation methodology applied is relevant even where the award was originally granted as a percentage or multiple of salary.

There’s also been a slight tweak to the introduction (essentially explaining the background to the regulations) and a few extra words have been added to explain the regulations’ position as to share awards (in respect of performance periods and “vesting date”).  Other than an update to the job title of one of the Corporate Governance Forum members, that’s it – in short, nothing that will disturb or concern readers who are already well into DRR drafting season.