Saïd El Khadraoui (S&D/BE) issued his draft report calling on every financial institution and listed company to have an independent remuneration committee accountable to supervisors. The rapporteur added that individual’s bonus must not make up more than 50 percent of their total annual remuneration
The ECON committee published a draft report on remuneration of directors of listed companies and remuneration policies in the financial services sector.
Rapporteur Saïd El Khadraoui (S&D, BE) states on his draft report the following : every financial institution and listed company should have a remuneration committee, which must be independent and accountable to shareholders and supervisors; non-executive board members’ compensation should only include fixed pay and should not include performance or share-based pay; and there must be an appropriate balance between variable and fixed remuneration, and that in particular an individual’s bonus must not make up more than 50 percent of their total annual remuneration.
On structure of directors' remuneration, the draft report recommends Member States to:
- set a limit (2 years maximum of fixed component of directors' pay) on severance pay (golden parachutes) and to ban severance pay in case of failure;
- require a balance between fixed and variable pay and link variable pay to predetermined and measurable performance criteria to strengthen the link between performance and pay;
- promote the long term sustainability of companies through a balance between long and short term performance criteria of directors' remuneration, deferment of variable pay, a minimum vesting period for stock options and shares (at least three years); retention of part of shares until the end of employment;
- allow companies to reclaim variable pay paid on the basis of data, which proved to
be manifestly misstated ('clawback').
It also calls for the adoption of binding principles on remuneration policies in the financial sector and conducting an impact assessment on the feasibility of instituting a European bonus tax.
© European Parliament
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EP draft report on remuneration.pdf
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