Overview

This bill mandates employee representation on company remuneration committees and introduces a binding annual shareholder vote on executive pay for public limited companies in the UK. The aim is to increase transparency and accountability in executive compensation.

Description

This bill, if passed, will make significant changes to how executive pay is determined in UK public limited companies. Key features include:

Employee Representation on Remuneration Committees

Public companies must include at least one employee representative on their remuneration committees. The bill allows companies to decide whether these representatives will have voting rights.

Binding Annual Shareholder Vote on Executive Remuneration

All public limited companies must hold an annual shareholder vote on executive pay. For the vote to pass, at least 75% of the voting shareholders must be in favor. The outcome of this vote is binding on the company.

Definition of "Executive"

The bill defines "executive" as any executive director of the company.

Commencement and Extent

The act will come into force two months after it is passed and will apply across England, Wales, Scotland, and Northern Ireland.

Government Spending

The bill does not directly specify any government spending. The administrative costs associated with enforcing the new regulations would need to be considered.

Groups Affected

• Public Limited Companies: Required to make significant changes to their remuneration committee structures and processes, potentially impacting executive compensation.
• Shareholders: Granted greater power over executive pay decisions through the binding annual vote.
• Employees: Given a voice in the setting of executive pay through representation on remuneration committees.
• Executive Directors: Their compensation will be subject to greater scrutiny and shareholder control.

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