Shareholders and employees will have more say about senior executive pay under new rules for listed companies voted through by the senate earlier this week.
The rules require listed companies to give a more detailed explanation about how their salary strategy dovetails with long-term goals and give a seat on the remuneration committee to a member of the works council.
In addition, from next year, 75% of shareholders will have to vote in favour of the salary strategy – up from the 50% plus one required for approval at the moment.
‘You will soon have to get a lot more shareholders on your side,’ corporate law expert Manuel Lokin told the FD. ‘That will create uncertainty and that is something listed companies don’t like. So I do think it will increase the power of the shareholder.’
Salary strategy does not focus on individual board members but does establish key facts, such as the relationship between executive and shop floor pay and sets out the rules for bonuses.
The new rules stem from EU guidelines on boosting long-term corporate strategy.
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