Draft remuneration guidelines implementing the shareholders rights directive (SRD) - BusinessEurope comments

Key messages

• BUSINESSEUROPE supports the key principle that the guidelines shall be non-binding in nature and not effectively broaden the disclosure requirements in the Shareholders Rights Directive (SRD). Any other approach would be a violation of the legal basis for the guidelines.
  • The guidelines should aim to help and guide companies on how the information required by SRD could be presented in a clear and understandable way taking into account the great variety of companies that need to comply with SRD, the different national settings, national corporate governance codes and the intended flexibility offered to companies by the non-binding nature of the guidelines.
  • Any information that is not a legal requirement stemming from the SRD is voluntary which means it should be left for the markets to decide (e.g. internally by companies, between the companies and their stakeholders, via national corporate governance codes or other non-binding guidelines). Therefore, if any voluntary information is included in the guidelines it must be made clear that companies remain free whether to include it in the remuneration report.
  • To encourage some degree of standardized presentation without violating the above principles, the guidelines should generally set out options, principles and/or objectives for companies (a flexible framework) rather than prescribing a very specific presentation. Where only one option or example is presented, it should be made clear that other options could also serve the purpose.
  • The guidelines could give special focus to some of the key legal requirements of the SRD which give rise to practical uncertainty, e.g. “awarded or due” in relation to pension or termination pay.
• BUSINESSEUROPE supports the key principle that the guidelines should not require unnecessary duplication of information. Cross-references should therefore be encouraged, where appropriate.
• The guidelines should not put pressure on companies to disclose more detailed information than required by the SRD or to reveal business sensitive information. E.g. the description of “confidentiality” in the COM discussion paper of 14 January 2019 gives the impression that companies have less flexibility on the level of detail to disclose than what is set out in the SRD.
• BUSINESSEUROPE is of the opinion that stakeholders should have an opportunity to be consulted on the draft guidelines.