You may be disappointed if you were expecting consistency in the way FTSE 100 companies are reporting under the new Directors’ Remuneration Report Regulations (as The Large and Medium-sized Companies and Groups (Accounts and Reports)(Amendment) Regulations 2013 are more helpfully known). Surely, with all those rules and the endless guidance, there can’t be that much scope to produce such different approaches in a DRR. To date, 34 FTSE 100 companies have published their first DRRs under the new regime (see our summary table). You can forget boiler-plate phrasing – there have been widely different approaches taken that must be reflective of different underlying interpretations of the new regulations and the GC 100 guidance.
About the only thing that all FTSE 100 DRRs agree on so far is that none of these companies has consulted their workforce about executive pay. That may be a disappointment to those who tried their hand at social engineering through the new regulations, but will be a surprise to few. Absent more pressure from investors on this requirement, there seems to be little prospect that, in future, companies will feel the need to include anything more than some generic wording in order to remain compliant.
A good example of what happens when shareholders really get behind an issue was highlighted in our blog post in February in which we noted that the first four FTSE 100 companies to publish under the new regulations all had to publish addenda to their DRRs before facing shareholders at their AGMs in order to address concerns over their executive director recruitment policies. Since then, no FTSE 100 company has had to follow suit – the initial objections may have had the desired effect, although it will be difficult to get a clear picture until the 2013 AGM season kicks off in April. In the meantime, there continues to be a mix of recruitment policies published – ranging from very tightly-controlled and detailed information on what new directors may be given, for example BP, through to policies that reserve a wide discretion on what may be offered, for example Persimmon.