The 2014 AGM season saw the first remuneration policy approvals under the Directors' Remuneration Report ("DRR") regime which came into force in September 2013. Although some companies have since been back to shareholders with revised policies, most companies have retained their policy unamended for the last three years. Those companies will, therefore, need to seek reapproval of their policy at their 2017 AGM.

Now is the time for those companies, and any others revisiting their policy, to think carefully about the content of their new policy and to take account of the lessons learned over the past few years. In particular, whilst policies should continue to focus on conveying a good message, and being reader friendly, they are still an important legal document. The policy overrides the rules of a share plan or the terms of a directors' service contract in the event of any inconsistency, and so should be reviewed with the same level of rigour as would be put into drafting a share plan or a service contract. We have seen many companies being surprised by problems caused by policies which were inadequately or loosely drafted and we strongly recommend that the opportunity is taken as part of the three year review process to ensure that policies are clearly drafted and consistent with underlying documents and, consequently, that the expectations of all stakeholders (whether shareholders, the Remuneration Committee or the executives themselves) are managed.

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