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Economics, government & businessLatest NewsDepartment for Business, Energy and Industrial Strategy (BEIS)Executive payPay & benefits

Hewitt praises more disclosure on directors’ pay for investors

by Mike Berry 25 Jan 2005
by Mike Berry 25 Jan 2005

Better disclosure on directors’ pay is leading to improved dialogue between companies and shareholders, according to research published by the Department of Trade and Industry.



Trade and industry secretary Patricia Hewitt said rules on pay disclosure introduced by the Government in its Directors’ Remuneration Report Regulations 2002 were having a “positive impact”.



She said the report published today by Deloitte underlined the effectiveness of the Government’s action in making directors’ remuneration open to closer scrutiny by shareholders.



As a result of the findings, the Government has decided against new provisions on directors’ remuneration in the forthcoming Company Law Reform Bill.



The findings show:





  • A significant increase in the levels of compliance with the Directors’ Remuneration Report Regulations. The research shows a rapid and almost complete reduction in directors’ notice periods to one year or less, and high disclosure standards of 80 per cent or more in 19 out of the 22 areas covered by the regulations


  • All of the top 350 FTSE companies now put their remuneration report to a separate shareholder vote and a number of well-publicised situations have seen remuneration committees changing their policy or practice as a direct result of shareholder voting


  • Better communication and engagement between shareholders and companies: over 90 per cent of shareholders say communications have improved


Companies are changing their remuneration policies and practices to reflect the link between pay and performance. For example: directors’ awards are now more likely to be vested proportionally to set levels of performance with full vesting of awards only for more stretching performance targets.



Hewitt said: “We are now seeing higher levels of compliance by top British companies, improved disclosure of directors’ pay and rewards and better engagement with shareholders.



“The UK now has a corporate governance framework for directors’ pay that leads the world in terms of transparency and accountability.”



Hewitt called on the Association of British Insurers, National Association of Pension Funds and the CBI to develop a common set of best practice guidelines on directors’ contracts.

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