Draft guidelines on the standardised presentation of the remuneration report under the scope of the revised shareholders rights directive (SRD) - Reply to the consultation

Key messages

BUSINESSEUROPE welcomes the fact that several of its concerns and suggestions have been taken into account, namely:

• It has been made clearer that:
  • the guidelines are non-binding,
  • companies are free to use alternative information methods,
  • the need for narrative information depends on the information given in tables/graphics and vice versa,
  • and some cross-referencing is encouraged.
• Mentioning of details such as “hypothetical payments” and “share buy backs” has been dropped from consideration, “ex post disclosure” is explicitly mentioned as voluntary and more emphasis is generally put on the actual SRD legal requirement to present only what is “awarded or due” to directors in the “most recent financial year”.
• Clarity on the fact that comparative information on the average pay of employees only needs to be made for the “company” while group level reporting is voluntary – and clarity that there is a transitional regime for the first reporting years.

However, on other points BUSINESSEUROPE regrets that in many sections of the draft guidelines there is content that is clearly not a legal requirement in the SRD. This is in contradiction with the legal basis and risks confusing companies and stakeholders on which are legal requirements, and which are voluntary information initiatives. This content should be either deleted or at least be clearly labeled as non-SRD-requirements.

For reporting requirements covered by the SRD, the non-binding nature of the guidelines would suggest more frequent use of the word “could” rather than “should”. This type of language is even more relevant when the guidelines go beyond SRD requirements.

The guidelines should loyally reflect the flexibility in the SRD regarding the level of detail in the remuneration report. This is currently not the case, especially as regards disclosure of performance criteria.