The (non-)executive pay under (even more) scrutiny
To shed light on some of the current trends in executive remuneration, PwC and CGLytics took a closer look at the 2020 proxy season for 49 listed companies in Belgium and Luxembourg.
increase in the number of resolutions on executive pay in 2020
financial KPIs compared to 27% non-financial KPIs for short-term incentive plans
financial KPIs compared to 16% non-financial KPIs for long-term incentive plans
To shed light on some of the current trends in executive remuneration, PwC and corporate governance data analytics firm CGLytics took a closer look at the 2020 proxy season (the period during which many companies hold their annual shareholder meetings) for 49 listed companies in Belgium and Luxembourg. This report examines remuneration items at the 2020 AGMs, the remuneration of directors as well as the measures taken regarding (non-) executive pay in reaction to COVID-19.
As we expect the financial year 2021 to be as challenging as 2020, the insights within our report will help you to tackle the following questions:
PwC’s 2020 Corporate Governance and Executive Pay report shows that, in the companies studied, executive pay is under increasing scrutiny from shareholders. Long-term incentives make up the dominant share of remuneration, and environmental indicators continue to gain importance.
Steering executive performance away from short-term achievements, and towards long-term success.
The proportion of long-term incentives to short-term incentives and base pay has continued to increase.
This has resulted in shares similar to those seen in 2015.
Environmental performance indicators are already third out of the top five most frequently used non-financial indicators for executive remuneration. However, the importance of non-financial vs. financial indicators remains low.
'We can definitely expect further developments with respect to climate reporting,’ says Bart Van den Bussche, a specialist in executive remuneration and Director at PwC Belgium. ‘In a study on directors’ duties published in July 2020, the European Commission stated it is working on sustainable corporate governance with the aim of enabling companies to overcome short-term pressures and making them accountable for the sustainability of their business conduct. The study highlights the fact that current board remuneration structures and board expertise pose challenges for sustainability. This regulatory agenda, combined with greater shareholder scrutiny of environmental, social and governance aspects and increasing transparency, will continue to drive change in executive remuneration and performance indicators.’