SHINING THE LIGHT ON CEO PAY PRACTICES:
2018 AEX Proxy Review
In preparation for this year’s proxy season, CGLytics is releasing its annual AEX proxy review, providing key takeaways from 2018 and setting out what will be topping agendas in 2019. Learning from key issues last season, as presented in this report, ensures corporations will be fully prepared to engage with investors confidently.
2018 PROXY SEASON HIGHLIGHTS
Last season saw some notable highlights given it was the first year that AEX companies had to comply with the revised Dutch Corporate Governance Code 2016* (the Code). The Code requires companies to detail how they will “create long-term value for all stakeholders”. The amendments pushed companies to reveal information about their internal culture and prompted them to provide greater clarity on how their strategies would result in long-term value creation for all stakeholder groups.
Disclosure of CEO-to-average employee pay ratios became mandatory as a result of the amended Code, and more Dutch listed companies included this in their 2017 annual report. The pay ratios varied widely last year and showed that a uniform methodology is needed in order to calculate pay ratios of executives to employees fairly, given companies’ presence in multiple geographic locations.
Nine of the 25 AEX companies submitted remuneration reports containing proposals to be voted on. Of the nine, five companies had over 15% vote against the proposals and three of these faced more than a quarter in dissenting votes.
Of the past years’ proposals to amend executive and supervisory directors’ remuneration, the majority encountered some criticism and a portion were withdrawn prior to the AGM. Those proposals not withdrawn encountered substantial shareholder dissent.
The study performed by CGLytics shows that 44% of the 25 AEX companies are considered misaligned between pay and performance over a one-year basis. On a three year basis, this was reduced to 38%.
Download the report to find out more.