Ireland’s traded public limited companies (PLCs) must disclose their directors’ remuneration policy, report annually on the policy’s implementation, and provide for a compulsory “say on pay” vote by shareholders under the European Union (Shareholders’ Rights) Regulations 2020 (the regulations) effective 30 Mar 2020. The regulations implement the European Union’s shareholder rights directive and amend the Irish Companies Act 2014.
PLCs include those listed on Euronext Dublin or on the main market of the London Stock Exchange. Prior to the new regulations, many PLCs already provided detailed disclosure around directors’ remuneration (either on a compulsory or voluntary basis), but these regulations require PLCs to provide more comprehensive content and disclosure.
In general, PLCs must establish a shareholder-approved remuneration policy for financial years commencing on or after 10 Jun 2019. Of note is a “grandfathering” provision that allows an exemption of up to four years for company director remuneration policies that received shareholder approval before 30 Mar 2020, regardless of the policy’s compliance with the regulations.
Under the regulations, shareholders have the right to vote on remuneration policies covering executive and non-executive directors at least once every four years at the company’s general meeting — and more frequently if a material policy change is proposed. The policy vote is advisory unless the company’s constitution requires a binding vote. If shareholders don’t approve the policy, the company must submit a revised policy at the next general meeting, and must publish voting results on the company’s website.
The policy should:
For financial years commencing on or after 10 Jun 2019, PLCs must prepare an annual report on each director’s remuneration according to the approved remuneration policy, and offer the report for an annual shareholder vote at the general meeting. The report must include: