The UK government has published changes to the rules on executive pay to bring the UK regime into line with amendments to the EU Shareholders Rights Directive. As the UK already has a comprehensive regulatory framework governing directors' remuneration reports and policies, for the most part the amendments are limited and concern the detail of the existing rules. The changes come into effect on 10 June 2019.

The changes are contained in the Companies (Directors’ Remuneration Policy and Directors' Remuneration Report) Regulations 2019 and alter the existing UK regime as set out below.


  • The existing UK regime only applies to quoted companies, that is, UK companies with equity shares officially listed in the UK or elsewhere in the EEA or dealt in on the NYSE or Nasdaq. The new rules extend the scope of the UK’s existing executive pay framework to cover unquoted traded companies, that is, any other UK companies with voting shares traded on an EEA-regulated market (such as the London Stock Exchange's main market, but not AIM). The government believes that, in practice, this will only capture a very small number of additional UK-registered companies, and these companies appear to comply already with the existing remuneration reporting requirements.
  • The new rules also implement a Directive requirement that companies must additionally report on the remuneration of anyone in the role of the CEO or deputy CEO even if they are not a board director. 

Directors’ remuneration policy

  • The remuneration policy must:
  • provide details on vesting periods for directors’ share-based remuneration, and any deferral and hold periods;
  • give the duration of directors’ service contracts; and
  • set out the decision-making process for determining, reviewing and implementing the policy, and explain all significant differences from the previous policy.
  • If the company loses a shareholder vote on a proposed remuneration policy, it must put a new policy approval resolution to shareholders at the next AGM or another general meeting.
  • The date and results of the shareholder vote on the policy must be included on the company’s website as soon as reasonably practicable and remain there for the life of the policy.

Directors’ remuneration report

  • The remuneration report must:
  • show the split of fixed and variable remuneration awarded to each director in each year;
  • specify any changes to the exercise price and date for directors’ share options;
  • compare the annual change in all directors’ remuneration (and not just that of the CEO) to the annual change in pay of the company’s employees and of the company’s performance (in terms of total shareholder return) over a five-year rolling period; and 
  • be available free of charge on the company’s website for 10 years.

Directors’ remuneration payments

  • All payments to directors must be in line with the approved remuneration policy, and the shareholders must first approve a policy amendment if the company wishes to make a payment that would otherwise be inconsistent with the policy.


  • The new rules apply from 10 June 2019 as follows:
  • remuneration payments or payments for loss of office must comply with the new requirements where an approved remuneration policy takes effect on or after 10 June 2019;
  • the new publication requirements apply to directors’ remuneration policies and remuneration reports from 10 June 2019;
  • the new content requirements for the remuneration report apply for financial years beginning on or after 10 June 2019; and
  • the new content requirements for the remuneration policy apply to any policy approved on or after 10 June 2019.
  • There are additional transitional arrangements for existing unquoted traded companies that are now caught by the regime: these have until the financial year 2020 to put forward a remuneration policy for a shareholder vote and to comply with the new requirements. Unquoted traded companies that have been complying with the existing regime on a voluntary basis can continue with a remuneration policy that was approved before 10 June 2019 in the same way that a quoted company can (and the next remuneration policy to be put forward for a vote, on or after 10 June 2019, will have to comply with the new requirements).