More shareholder say on directors’ pay: MEPs’ deal with Council and Commission  

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New rules empowering shareholders to vote on directors’ pay, so as to tie it more closely to their performance, were informally agreed on Thursday. These rules also aim to foster shareholder commitment to companies’ long-run success.

Sergio Cofferati (S&D, IT), who is steering the legislation on shareholder rights and corporate governance statements through Parliament, said: “I believe that the agreement reached by the European institutions is a very positive one. The measures agreed upon will help to steer investments towards a more long-term oriented approach and will ensure more transparency for listed companies and investors”.

"The Directive will guarantee stronger controls over the pay of listed companies' directors, including a vote by shareholders on the remuneration policy (the so-called 'say on pay'), a closer link between directors' pay and companies' performances in the long term and full transparency on the remuneration awarded to individual directors”, he added.

The new rules were agreed by Parliament, Council and Commission negotiators and still need to be approved by both institutions.

Shareholder say on director’s pay

Shareholders will have the right to vote on remuneration policy for company directors and the pay actually awarded must be transparent, the negotiators agreed. The policy should also explain how employees’ pay and employment conditions are taken into account and how it contributes to the company’s long-term interests.

Certain potentially dangerous transactions should be publicly disclosed and approved through procedures, which ensure that companies’ and shareholders’ interests are protected.

The rules will also give companies the right to identify their shareholders, in order to better and more directly communicate with them. Companies will also have to confirm the votes cast in general meetings by, or on behalf of, shareholders.

Mr Cofferati also underlined: “Thanks to the European Parliament's efforts on the shareholder rights directive, the European Commission has recently proposed a specific new Directive on public country-by-country reporting by multinationals on tax matters. In the context of this new proposal, an ambitious public country-by-country reporting needs to be approved as soon as possible”.

Next steps

The Legal Affairs Committee will formally approve the deal with a vote in January and the final plenary vote is planned for the second March session.



According to the European Commission, only 13 EU member states currently give shareholders “a say on pay”, either through a vote on directors’ remuneration policy and/or report. Only 15 require disclosure of the remuneration policy and 11 require disclosure of individual directors’ pay.