The Second Shareholders' Rights Directive (ARUG II) brings some significant changes for issuers. Above all, the discussion focused on the provisions on shareholders' rights of co-determination in the remuneration of the Supervisory Board and Management Board ("Say on Pay"). To what extent does this increase the transparency requirements for companies? What experience have companies in other countries had with similar regulation?
Dominik Slappnig (Sika AG) reported from the perspective of a Swiss issuer due to the so-called Minder initiative there has been a regulation on Say on Pay for Swiss companies since 2013. Since then, both investors and issuers have had to invest considerably more time in coordinating this issue. Claus Döring (Börsen-Zeitung) and Thomas von Oehsen (ISS) shared their views and future expectations on the communication of companies from the point of view of the specialist media such as voting rights consulting. Dr. Robert Vollrath (Hering Schuppener) discussed how well German issuers are already prepared for ARUG II.
One of the central topics of the discussion was the expectation of the various stakeholders of the company with regard to transparent communication on all aspects of remuneration. The focus was on a clear and understandable system of Management Board remuneration. While the level of remuneration is more likely to be discussed in public, the owners are primarily interested in the comprehensibility of the system and its incentive effects. Currently, many remuneration systems are too complex, and the incentives are not even clear to those affected.
In this context, it was discussed that the communication of the Chairman of the Supervisory Board - and also of other members of the Supervisory Board - had also gained in importance. ARUG II confirmed that remuneration is a central topic of governance commitment. There was critical discussion as to whether too much attention would not even be paid to this topic - to the detriment of other significant aspects of corporate governance.
Using Switzerland as an example, the experiences following the introduction of a Say on Pay system were presented. It was also discussed whether the actual objectives of the popular initiative had actually been achieved. In any case, there was no sign of a decline in the remuneration of the Board of Directors.
Finally, the panel participants took a look into the future: on the one hand, the expectations of the proxy advisors with regard to the companies were clearly presented. On the other hand, the panelists did not expect any extraordinary conflicts in the first relevant season of the Annual General Meeting in 2021. An important success factor for companies is to deal with the new requirements at an early stage and to enter into dialogue.