Directors' remuneration is never far from the headlines. 

Average pay for FTSE 100 chief executives has risen by more than 300% in the past 15 years, from approximately £1 million in 1998 to £4.1 million in 2013; share prices have only risen by about 10% in the same period (2013 Remuneration Survey produced by MM&K and Manifest, efinancial news 23 September 2013).

The government's efforts to address the perceived disconnect between listed company directors' pay and the performance of their companies has resulted in a new regime for disclosure and shareholder approval of remuneration, in force from October 2013. A number of interesting issues are already emerging from the first wave of remuneration reports.  We have been assisting a range of listed companies to finalise their reports and to ensure that they comply with the new requirements.

The new regime applies to remuneration payments to both executive and non-executive directors of all UK-incorporated quoted companies (a quoted company is defined as a company with shares listed on the Official List, officially listed in an EEA member state or admitted to dealing on the New York Stock Exchange or NASDAQ). 

There is a new obligation to publish a Directors' Remuneration Policy, setting out the company's forward-looking Policy on remuneration and potential payments (including its approach to recruitment and payments for loss of office). The Policy is subject to a binding shareholder vote at least once every three years. 

There is also expanded content and a prescribed tabular format for disclosure of the Annual Report on Remuneration.  This should explain how the company's Policy has been implemented in the previous financial year, including a single total figure of remuneration for each director, details of pension entitlement, incentive awards and share interests. Actual pay earned rather than potential pay should be disclosed.  The Report is subject to an annual advisory vote by shareholders at the AGM.