Regulations on executive pay ratio reporting introduced
Implementation date: 1 January 2019
The Companies (Miscellaneous Reporting) Regulations 2018 (SI 2018/860) introduce new reporting requirements on certain companies:
- Quoted companies with more than 250 UK employees are required to include certain pay ratios for the relevant financial year in the directors' remuneration report. The pay ratios compare the total annual remuneration of the CEO to UK employees whose pay and benefits are on the 25th, 50th and 75th percentiles.
- Quoted companies are required to include in the directors' remuneration report how share price changes impact on shares receivable by directors under long-term incentive schemes during the relevant financial year.
- Large companies are required to provide a statement as part of their directors' report, and on their website, as to which corporate governance code or the corporate governance arrangements they applied in the financial year.
- Companies with more than 250 UK employees are required to include a statement as part of the directors' report on how the directors have engaged with employees and had regard to their interests when making business decisions.
- Large companies are required to include a statement as part of their strategic report setting out how directors have had regard to the duty to promote the success of the business. The statement must be made available on their website. Large companies are also required to include a statement as part of their directors' report on how they have had regard to the duty to promote the success of the company in their business relationships with customers, suppliers and others.
The reporting requirements under the Regulations apply in respect of financial years beginning on or after 1 January 2019. Therefore, the first reporting starts in 2020.
