Scope of application
The remuneration report remains a part of the corporate governance statement (which is in itself a part of the annual report of listed companies). This requirement only applies to listed companies.
The remuneration report continues to apply to the remuneration of directors (including members of the supervisory board and management board in case of a two-tier structure), certain other executives and persons entrusted with the daily management (including newly appointed directors, executives, daily managers or those that have left the company during the relevant financial year).
Content - Under the new regime, the remuneration report must provide a detailed and complete overview of the remuneration of the directors, other executives and persons entrusted with daily management. In addition to the information which is already required, the remuneration report will have to contain the following elements:
- Information on how the total remuneration amount must be understood in the framework of the (formal) remuneration policy and how it contributes to the long term performance of the company.
- Information on derogations (if any) from the remuneration policy, including an explanation regarding the exceptional circumstances and the specific parts of the remuneration policy which are derogated from.
- Information on the annual change in remuneration, the annual change in the development of the company's performance and the annual change in average remuneration of employees of the company other than the directors, other executives or daily managers over a period of at least five financial years and presented in a manner which allows a comparison between these.
- The ratio between the highest remunerated director (or other executive as the case may be) and the lowest remunerated employee of the company.
Aggregated or individual information
Following the implementation of SRD II, individual disclosure will be required for all directors, members of the supervisory board, members of the management board and persons formally entrusted with daily management. Aggregated disclosure will remain permitted with respect to other executives regarding certain parts of the information. Other parts such as share-based remuneration and severance payments must be provided on an individual basis.
The remuneration report will remain subject to an advisory vote by the shareholders' meeting. But the company will now also have to explain in the next remuneration report in what way the vote of the previous shareholders' meeting has been taken into account.
Entry into force
These new rules with regard to the content of the remuneration report will need to be applied for the first time to the report to be published in 2021. Hence, if not done so already, listed companies should take this new legislation into account when currently drafting their remuneration reports.
Impact of the 2020 Belgian Code on Corporate Governance for listed companies on remuneration report
The renewed 2020 Belgian Code on Corporate Governance for listed companies that came into force on 1 January 2020 also contains a number of provisions that affects the remuneration reporting in listed companies (see remuneration policy).
The corporate governance committee has published an explanatory note on the remuneration report. This note offers some guidelines to assist listed companies in the application of the remuneration report regulations.