A Move Towards Binding Say on Pay in Britain
The UK moved one step closer to requiring companies to hold a binding Say on Pay vote. Yesterday, Business Secretary Vince Cable presented a bill to Parliament that requires companies listed in Britain to hold binding Say on Pay votes at least once every three years and potentially more frequently if the pay program changes. The bill includes two types of Say on Pay votes: 1) Binding vote on prospective pay policy occurs at least once every three years or annually if the company changes its pay policy. Once approved, companies cannot make payments outside the scope of the policy without reapproval. 2) Nonbinding vote on how pay policy was implemented in the previous year, including actual amounts paid. If a company’s advisory (non-binding) vote does not pass, the company is required to hold a binding vote on its pay policy the following year. The rules are expected to be approved by Parliament and become law by October 2013. The New York Times has more information and Gibson Dunn explains the details.