UK: board diversity report and updated executive search code

The Parker Review Committee has published its final report into the ethnic diversity of UK boards. The final recommendations are substantively the same as those published in a 2016 consultation draft. The final report recommends that there should be at least one director of colour on each FTSE 100 board by 2021 and each FTSE 250 board by 2024. There are also recommendations on ensuring the pipeline, executive search principles, and that commentary on a company’s efforts to increase ethnic diversity within its organisation, including at board level, should be included in the description of the company’s diversity policy set out in the annual report. Companies that do not meet the board composition recommendations by the relevant date should disclose why this is the case. Continue reading

Australia: Safety due diligence: one size cannot fit all

With a heightened awareness of officers’ WHS due diligence obligations, there is a risk the lines between governance at the board level and management at the executive level are blurred – which is potentially bad for safety.

Steve Bell and Nerida Jessup co-authored an article for the December edition of OHS Professional, published by the Safety Institute of Australia.

Click here to read the full article.


Steve Bell
Steve Bell
Partner, Melbourne
+61 3 9288 1236
Nerida Jessup
Nerida Jessup
Senior Associate, Sydney
+61 2 9322 4732

Germany: Immediate termination due to participation in a competing company

In Germany, notice periods in cases of ordinary termination can be very long (eg, seven months to the end of a calendar month). Until expiry of the notice period, an employee is prohibited by law from carrying out competing activities. If an employee infringes this prohibition, this can (on a case-by-case basis) justify a termination for cause with immediate effect. Under certain conditions, holding shares of a competing company can also be considered a competing activity.

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UK: ESMA publishes final versions of UCITS V and updated AIFMD remuneration guidance – where are we now?

ESMA has published the final version of its guidance on the remuneration provisions of UCITS V, available here, and the updated guidance on the AIFMD remuneration provisions, available here. These final versions are the same as those included in in the final report published by ESMA in April 2016. 

Publication of these guidelines is a timely point for UCITS management companies to check that the workstreams required to become compliant with the UCITS Remuneration Code are underway.  Detailed below is the status of the various guidance documents that have been published to date and what further guidance is expected, and an update on the key question of whether UCITS management companies can rely on the "proportionality principle".

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UK: Government announcements – workers’ rights post Brexit, employee representation on boards, employment of foreign workers, and review of modern employment practices

At the Conservative Party conference, Theresa May announced plans to repeal the 1972 European Communities Act, which gives direct effect to EU law in the UK, and to transpose all existing EU laws into domestic legislation. She also promised that "existing workers' legal rights will be guaranteed" during her premiership.

The conference speeches also built on the policy announced by Mrs May at the G20 summit to tackle corporate irresponsibility, "cracking down on excessive corporate pay and poor corporate governance, and giving employees and customers representation on company boards".

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UK: BIS Select Committee launches Corporate Governance Inquiry

The Business, Innovation and Skills ("BIS") Select Committee announced on Friday that it is launching an inquiry into corporate governance, focussing on executive pay, directors duties and boardroom composition, including employee representation and increasing the number of women in executive positions.

Looking at executive pay in isolation, the inquiry follows a series of developments over the summer including the GC100 and Investor Group's updated guidance on remuneration reporting and the Executive Remuneration Working Group's Final Report on the current executive pay regime. The outcome of the Inquiry is likely to influence the corporate governance proposals trailed by Theresa May as part of her leadership campaign which the Government intends to announce before Christmas. These issues are highlighted in our recent briefings on executive pay: GC100, Executive Remuneration Working Group and Remuneration Reports.

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UK: Updates to the GC100 and investor group guidance on remuneration reporting

The GC100 and Investor Group has published a revised version of its guidance on directors’ remuneration reports and policies, which all UK incorporated companies listed on the LSE, in any EEA state or on NYSE or NASDAQ are required to produce. Whilst the revised Guidance largely follows the previous version, it also includes some important updates which companies will need to carefully consider in preparing their next report and updated policies.

This article sets out the key revisions made to the Guidance, including strengthened guidance on the requirement for policies to impose a maximum salary for directors, the use of discretion within policies and the approach to disclosure of performance targets for directors’ annual bonuses, which is an issue that has received particular investor scrutiny. The updated Guidance is available in the GC100 section of the Practical Law website

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UK: Executive Remuneration Working Group Final Report

The Executive Remuneration Working Group has now published its Final Report, building on its Interim Report which we covered in our bulletin here.

The Investment Association has informed the Working Group of its intention to review its Principles of Remuneration in light of the recommendations of the Working Group.

The timing is apt as Theresa May has signified her determination to tackle perceived excesses in executive pay with an annual binding shareholder vote on pay (rather than a binding approval of the remuneration policy every three years); more transparency, including full disclosure of bonus targets and publication of pay multiple data; and simplification of the way bonuses are paid.

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UK: Remuneration policies revisited

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.

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