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The 2015 UK DRR Season: What’s New?

Admittedly, it is still early days to asses what’s new in FTSE DRRs for the 2015 accounting period.  Even so, it looks like this will be a slow year for developments in DRRs for medium and large listed companies.  Of course, that’s probably not surprising.  For a company to change its policy requires putting the whole policy to shareholders for approval – it’s not possible to put a minor change to shareholders for approval in isolation.  As we have discussed earlier, the majority of companies will have to put their policy before shareholders for approval at their 2017 AGMs.  There is no compelling reason in most cases to make changes any earlier.

Nonetheless, the trend of increasing clawback provisions to back up malus provisions continues.  Strictly speaking, the adoption of a clawback provision is a change to a company’s policy.  Notwithstanding the comment about there being no provision in the legislation permitting piece-meal changes to a remuneration policy, many companies have or are adapting clawback provisions without taking their full policy back to shareholders.  Presumably, comfort for taking this approach comes from the combination of:

  1. including clawback provisions is in response to investor pressure to do so; and

  2. the sanction for doing something outside an approved policy is a restriction on what can be paid to an executive director – quite the opposite of what a clawback provision is designed to do.

The other feature of the DRRs released so far is the move towards increased disclosure of bonus targets, albeit retrospectively.  Again, being cautious of using too small a sample size to come to any meaningful conclusions, there continues to be resistance to disclosure of bonus targets, even retrospectively.  This falls short of what the Investment Association is looking for, judging by their letter to the chairman of quoted company remuneration committees last year (see our previous post).

For the 20% or so of the FTSE100 that have released DRRs so far the overall impression seems to be one of edging up the level of retrospective disclosure of bonus targets (but probably still not to the level that the Investment Association is seeking) and leaving well alone with everything else, pending a full review of remuneration policy later in the year for adoption at the 2017 AGM.

© Copyright 2019 Squire Patton Boggs (US) LLP


About this Author

Bernhard Gilbey, Squire Patton Boggs, Tax Attorney, Benefits Lawyer

Bernhard Gilbey leads our Tax Strategy & Benefits practice group and provides tax advice in relation to a wide range of both domestic and international corporate tax issues. This includes identifying planning opportunities for corporate and individual vendors as well as advising on the tax efficient methods of restructuring corporate groups.  Bernhard regularly provides advice to listed and privately owned clients on executive compensation matters ranging from recommending suitable incentive arrangements to the drafting and implementation of the most appropriate plan...

44 20 7655 1318
Sarah Nicholson, SquirePattonBoggs, UK, tax strategy, employee plans
Senior Associate

Sarah Nicholson is a share incentives expert and has a vast experience in all aspects of planning, adopting and the ongoing implementation and management of share schemes and related aspects. Sarah has advised clients in relation to both Revenue-approved and unapproved share schemes in the UK as well as the application and implementation of Enterprise Management Incentive options, long-term incentive plans and employee benefit trusts. Sarah acts for both quoted and private companies and has advised on incentives ranging from options for a minimal number of employees in a small start-up company to global offerings of shares by multinational companies. 

44 121 222 3688