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Aligning UK remuneration reporting regulations with the requirements of the SRD II


Introduction Remuneration reporting and governance for UK companies is set to undergo further changes in the coming months, as the Shareholder Rights Directive II (SRD II) comes into force. The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019 set out proposed amendments to the existing remuneration reporting requirements that are currently waiting to be made into UK law. If approved, they will come into force on 10 June 2019.


The key changes to the current regime (although generally minor in nature) are summarised below.

Remuneration Policy: key changes

(apply to policies to be approved on or after 10 June 2019)

  • Scope: to cover not only Board directors, but also the CEO and Deputy CEO (where applicable) if these roles do not sit on the Board;

  • AGM voting: if the company loses a shareholder vote on a proposed Remuneration Policy, it must bring a new Policy to a vote at the next AGM. Previously, the company could rely on an unexpired Policy until the end of its 3-year life;

  • Improved disclosure: the Policy must set out the process through which the Policy has been determined and implemented, including measures to avoid/manage conflicts of interest. The role of the Remuneration Committee should also be explained;

  • Service contracts: the Policy must set out the duration of directors’ service contracts (where not already disclosed); and

  • Loss of office payments: payments outside of the approved Remuneration Policy may only be made if an amendment to the Policy specifically authorising such payments has been approved by shareholders. Previously, one-off approval for such payments was sufficient.


Annual Report on Remuneration: key changes

(apply to for financial years starting on or after 10 June 2019)

  • Scope: must include details of how the Policy is implemented for the CEO and Deputy CEO (where applicable) even if these roles do not sit on the Board;

  • Single figure table: must include columns showing total fixed remuneration and total variable remuneration for each director;

  • Changes in annual remuneration: current comparison of the % change in CEO remuneration vs. that for other employees to be expanded to include all directors (including non-executive directors). There is also a requirement to base this analysis on employees of the company as a whole (previously there was flexibility for companies to choose an appropriate subset), and to build up this disclosure to cover a 5-year period; and

  • Availability: the report must be freely available on the company’s website for ten years.


Mercer | Kepler commentary The remuneration reporting requirements set out in SRD II are, to a large degree, already captured by existing disclosure requirements in the UK. As such, only minor amendments are required to the way that companies report on remuneration, although some of the changes (such as the change to comparing changes in director remuneration vs employees of the company as a whole) add complexity. There is also a question about the continued application of SRD in the event that the UK ceases to be a member of the EU. However, greater levels of disclosure will likely remain the general expectation over time, whether driven by legislation or simply shareholder and political pressures. This briefing is for general guidance and does not necessarily cover all areas of the topics included in this briefing. It is not designed to give legal or other professional advice.

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