On 2 June 2010, the European Commission published its Green Paper on corporate governance in financial institutions and remuneration policies. The Green Paper contains recommendations, in the wake of the financial crisis, for measures to improve corporate governance in financial institutions. In addition, it contains proposed measures regarding remuneration policies in listed companies and financial institutions.
Broad outlines of proposals on remuneration policies
In the Green Paper, the European Commission has concluded that its Recommendations of 30 April 2009 on (i) the remuneration of directors in listed companies and (ii) remuneration policies in the financial services sector have been applied by EU member states only to a moderate extent, and that, insofar as measures have been taken at national level, there are wide variations between different member states in this regard. A description of the above Commission Recommendations is given in our newsletter of 18 May 2009. Through the Green Paper, the European Commission has initiated a 'brainstorming' exercise regarding the desirability and content of legislative measures in this area. Interested parties (such as the member states and the European Parliament) are invited to inform the Commission of their views on, among other things, the following subjects:
- the content and form, binding or non-binding, of possible additional measures at EU level on remuneration for directors of listed companies;
- whether directors' stock options should be regulated at EU level;
- the discussion at EU level of the favourable tax treatment given by certain member states to stock options and other similar remuneration;
- the strengthening of the role of shareholders and employees (and their representatives) in establishing remuneration policy;
- whether severance packages should be regulated at EU level;
- the reduction or suspension of the variable component of remuneration within financial institutions which have received public funding.