Employee Incentives 2025 Comparisons

It is very common for employees in the UK to be offered participation in cash or share incentive plans.

The most common type of arrangement offered in the UK is an annual cash bonus, which has become an established part of remuneration packages.

It is also typical for public companies to offer share incentive plans to employees. The type of arrangement often used is a discretionary share plan, offered to senior employees but companies may also offer all-employee share plans.

Private companies more rarely offer all-employee share plans but may offer a share incentive arrangement to senior managers or a cash-based plan that tracks the value of the company or its shares.

As private companies often do not have a readily available market for their shares, they tend to offer cash incentives, which may be linked to the value of shares or the value of the company. Where a share incentive is offered by a private company, participation is often limited to senior management and is in the form of upfront shares, giving management an opportunity to share in any growth in value at the time of an exit event (eg, sale, IPO). Any shares held will usually be subject to restrictions as to when they can be sold or traded.

Public companies, with a readily available market, will often offer share incentives to more employees in their group, as compared to private companies, and share awards tend to be in the form of a right to receive shares in the future if certain conditions are met. Any shares received by employees once those conditions are met can then usually be sold at any time (unless there are additional shareholding or dealing requirements that apply, usually to senior employees).

Executive Pay

In the UK, there is an increased focus on making the UK a competitive economy, which is able to attract companies to invest and list in the UK. A material part of this is ensuring that companies are able to recruit, retain and motivate talent at the executive level through appropriate pay levels and incentive arrangements.

In recognition of this, there has been a shift in approach by institutional investors and some shareholders. There is a new focus on allowing companies to take an individual, nuanced and flexible approach to executive pay. If a company has a global footprint, and, for example, a large US presence, shareholders may be more open to that company increasing pay and making structural changes to incentive arrangements to align more with the US market.

Financial Service Firms

In the financial services industry, the UK regulators (the Prudential Regulation Authority and Financial Conduct Authority) have emphasised that they, and their regulations, have a role to play in making the UK a competitive market and ensuring that UK financial service firms can be competitive on pay to attract talent.

As part of this, the UK regulators have been looking at the extensive remuneration regulations in place and have either already relaxed or are looking to relax certain elements of the regulations and reduce their complexity. This is particularly the case in relation to banks, building societies and certain designated investment firms to whom the most stringent rules apply. In 2023, the UK regulator removed the “bonus cap” requirement for those firms. This was a requirement from EU law that the ratio of variable to fixed pay for certain senior employees (known as “material risk takers”) had to be no higher than 1:1, or 2:1 with shareholder approval. In 2024, the UK regulators consulted on a range of additional rule changes, including reducing the period during which variable pay has to be deferred for material risk takers and changing the way in which a firm has to assess which of its staff should be subject to the more stringent rules.

Role of Malus and Claw-back

While there has been a clear development in the market around moving to a more flexible approach on executive pay, at the core of all pay expectations and regulations is still the principle that there should be pay for performance and poor performance should not be rewarded. There has been a renewed focus on the importance of reducing (malus) or recovering (claw-back) executive pay in response to certain trigger events.

The ability to reduce variable remuneration before it has been paid or require variable remuneration to be repaid in certain circumstances is now cemented in the core of UK executive pay and an area of likely focus in the next 12 months.

Tax

In the UK, as with many other jurisdictions, tax follows the basic principle that if something is paid in relation to an individual’s employment, it is subject to income tax and social security contributions. The rates of income tax (especially when combined with employee social security) are currently higher than the rates of tax for capital gains or dividends. As a result, there has long been a desire to structure incentive arrangements so that they qualify for capital, rather than income, treatment.

The new UK government has committed to “ensuring fairness” in the tax system. It has stated that it intends to close what it views as loopholes so that those who make their home in the UK pay tax in the UK, and to take action against arrangements that have to date been taxed as capital but which the government feels would more appropriately be taxed at higher rates than capital gains tax rates.

Carried interest – an arrangement under which a manager of a fund can receive value, linked to the performance of the fund – is one area of focus for the UK government. It has not traditionally been taxed as employment income but as capital gains, making it an attractive incentive for fund managers. The UK government has raised the rate of tax on carried interest and said it will consult on bringing carried interest into the income tax regime, although it would not be taxed in exactly the same way as the more traditional employment income.

The new UK government has also looked at employee ownership trusts (EOTs). These are specific structures which allow business owners to sell the business to an employee-owned trust, and they are different from the more common “employee benefit trust” or EBT. If certain conditions are met, owners can receive tax relief on the sale proceeds when they sell their business to an EOT, and there are also some tax advantages for employees. The government has made changes to the conditions for tax relief to tighten the rules and close loopholes to ensure that the spirit of the structure is honoured.

The new UK government had promised not to raise income tax for employees, and it has honoured this promise. However, it will increase employer social security rates from 6 April 2025 and reduce the threshold at which businesses have to start paying employer social security. This change will impact UK businesses, reducing their cash and leading some to consider the affordability of overall incentive packages. As a consequence of that, we are seeing renewed interest in types of employee share plans that offer favourable tax treatment, including no social security being payable if conditions are met.

The previous government had lowered the capital gains allowance significantly, which means that more people will be paying capital gains and, from 30 October 2024, at a higher rate. In the UK, capital gains tax is payable by individuals, not through their employer. Therefore, employees who participate in share plans may find themselves needing to do a tax return and pay capital gains tax when they sell their shares, which they may not have needed to do before. There is likely, therefore, to be an increase in companies looking to educate and inform employees about dealing with their shares and sale proceeds tax efficiently and meeting UK tax requirements.

The previous government issued a “call for evidence” in relation to the UK tax-favourable all-employee share plans, asking for information on ways to improve, simplify and modernise these arrangements. There are a number of ways the plans can be improved. Employee share ownership is seen as a real positive in the UK, offering many advantages for companies, employees and other stakeholders. The new UK government has not given any indication as to whether it will respond to the call for evidence, but it has previously indicated that it was in favour of employee ownership, so this may be on its agenda for the future.

New Share Trading Platform

Another key development in the UK is the potential introduction of the Private Intermittent Securities and Capital Exchange System (PISCES). PISCES would be a new type of stock market, focused on providing a market and liquidity for private company shares on an intermittent basis. The idea is that it will facilitate a marketplace where private companies can offer their shares to investors without going through the traditional public exchange processes. Under the draft proposals, there will be fewer regulations and rules around disclosure and the information that needs to be provided to investors.

If implemented, employees who hold shares in private companies that choose to join PISCES will be able to trade on PISCES, providing a market for employee shares in private companies that would otherwise not have been available, and allowing employees to realise value from their shares earlier than under a more traditional plan where value is often only realised when other investors exit from the business. Further details are awaited.

Cash Incentives

• Annual cash bonuses are very popular and are generally offered to the majority of employees by UK companies. Bonuses are normally paid at the discretion of the employer, based on company and individual performance, looking at financial and non-financial targets. An employee will usually need to be in employment on the payment date to receive their bonus. For certain senior employees, part of the bonus, over a certain threshold, is often then deferred into an award over shares.
• Phantom plans are often used by private companies to mirror the benefits of a share incentive. Employees receive a conditional right to a cash amount, which is calculated by reference to share value, share price growth or growth in the business more generally.
• Deferred cash plans are used in the financial services sector to support deferral of cash bonuses to the extent that this is required by sector-specific regulations. Employees are granted a conditional right to receive a fixed cash amount in the future, subject to remaining in employment.

Discretionary Share Incentives

One type of share incentive arrangement is a discretionary share plan, under which a company can select who can participate in the plan. These plans are often used for senior executives.

Awards will typically take the form of “options” or “conditional awards”. Conditional awards are the most common form of award in the UK currently, followed by nil-cost options. Market value options (where the option has an exercise price equal to the market value of the shares under option at the point of grant) tend only to be used where required under a tax-favourable plan (see further below). In more detail:

• A conditional award gives a right to receive shares on a set date in the future, subject to certain conditions being met. The conditions can include a requirement to stay in employment and/or conditions related to company or individual performance. If the conditions are met, the award “vests”, meaning that the individual becomes entitled to receive shares.
• An option gives a right to acquire shares during a set period in the future, provided that certain conditions are met. The conditions can include a requirement to stay in employment and/or conditions related to company or individual performance. If the conditions are met, the option “vests” and “becomes exercisable”, which means that the individual becomes entitled to request that shares be delivered to them when they choose (known as “exercise of an option”), during a set period (known as the “exercise period”). There is no automatic right to receive the shares when the option vests; instead, an option must be exercised before an employee can receive the shares.

Types of share plans include:

• Long-Term Incentive Plans (LTIP): Under these plans, a company can grant an award over shares, subject to certain conditions. There will often be performance conditions attached to an award. These are the most common forms of share incentive arrangements for UK-listed companies. Performance conditions can be linked to company or group performance and can include, as examples, relative total shareholder return (TSR) compared to a group of competitors, the level of increase of earnings per share or the return on capital of a company. Performance conditions can also be non-financial, covering health and safety measures, or environmental, social and governmental targets. These measures tend to reflect the specific sector of the company.
• Restricted Share Plans (RSP): These are similar to an LTIP except that there will not be any performance conditions. There is usually a general underpin which requires the company’s financial health to justify the delivery of shares. These are becoming increasingly popular for UK-listed companies, either as a standalone arrangement or used in conjunction with a performance-based award (when they are known as “hybrid” plans). Institutional investors expect companies to reduce the overall grant size of awards if they are moving from an LTIP performance-based structure to an RSP-type structure because RSP awards will vest purely based on time and the underpin.
• Share Option Plans: Under these plans, a company can grant an option over shares, subject to certain conditions, which can be performance conditions or time conditions. This can be operated as or in conjunction with a tax-favourable CSOP (see 2.9 Tax-Favourable Plans).
• Growth Share Plans: Under these plans, a company has a special class of shares that reward employees for the growth in value of a company above a certain “threshold” or “hurdle” when other investors realise their investment. The shares tend to not have voting or dividend rights and will be subject to a wide range of restrictions. This is a structure commonly used by private companies.

All-Employee Share Incentives

Companies may also have share incentive plans that are offered to all employees within their group so there is no discretion for them to choose individuals to participate.

A common all-employee plan for public companies is a share purchase plan under which employees agree to purchase shares on a regular basis using deductions from their salary.

See 2.9 Tax-Favourable Plans for more detail on the tax-favourable share purchase plan available in the UK, as well as the other all-employee tax-favourable plan available in the UK.

The offer, grant, vesting or exercise of share awards/options or the issue or transfer of shares under a share plan should not give rise to any prospectus requirements for the parent company or local employer. This is on the basis that there is an exemption from the UK prospectus requirements where the share plan is offered to current or former employees or directors of the parent company, or its subsidiaries, provided that a document is provided to participants giving details about the offer. As an alternative, any offers to fewer than 150 persons in the UK are also usually exempt.

There are restrictions in the UK on:

• offering shares;
• promoting a share offer; and
• providing investment advice.

These activities can only be carried out by an entity authorised by the UK regulator or if an exemption applies.

The issuer and the local employer should fall within the employee share plan exemption for offering shares and financial promotion. This is on the basis that only employees or former employees of the group participate in the share plan and any communication is for the purposes of the share plan.

There is no equivalent exemption for giving investment advice, which means any communication to employees cannot contain investment advice.

The local employer can provide funding for the costs of a plan (including the cost of the shares or cost for the administration of the plan) to the extent that the costs relate to their employees. The local employer will need to be comfortable that providing this funding is in its corporate interest.

There is legislation governing the provision by a company of financial assistance for the purchase of its own shares or shares of its parent. The rules would not apply to a private company providing funding for the purchase of shares in itself or another private company, but they would prohibit (i) a UK public company from giving financial assistance for the purpose of the acquisition of its shares or those of a parent and (ii) a UK private company from funding the acquisition of shares in a public parent company. There are exemptions from the prohibition, including in relation to employee share plans, but conditions need to be met.

A UK-listed company will need shareholder approval for a share plan if either it is a long-term incentive scheme (as defined in the UK Listing Rules) in which its directors can participate or it wants the ability to use new shares under the plan.

A grant of an award should be approved by the board of the company (or the remuneration committee, acting under delegated authority from the board) and ideally should be granted under a deed to create a unilateral binding contract between the company and the employee.

To increase the likelihood that the terms of the awards can be enforced, employees should also be asked to accept the award (this is often done electronically in practice). This is particularly important for enforcing leaver provisions, which lapse an award when an employee leaves, or enforcing malus and claw-back to reduce an award or require an employee to repay an award in certain circumstances.

There are no exchange control restrictions or exchange control reporting requirements in the UK.

Grant

On the grant of an option or a conditional award, no income tax or social security contributions will usually be due. 

Vesting

On the vesting of an option – ie, when it becomes exercisable, no income tax or social security contributions will usually be due.

On the vesting of a conditional award, income tax and social security contributions will be due on the fair market value of the shares at that time.

Exercise

On exercising an option, income tax and social security contributions will be due on the fair market value of the shares at that time, less any price paid by the employee to exercise the option. 

Sale

Capital gains tax will be due on the difference between the sale proceeds of the shares and the amount on which the employee paid income tax plus any option price paid by the employee. 

Acquisition

No income tax or social security contributions are due on acquisition if restricted shares are acquired at their unrestricted market value for UK tax purposes. If the shares are acquired for less than this, income tax and social security contributions are due on acquisition on the difference between the market value (with a percentage discount applied for the restrictions) and the price paid. There is an exception for this where the shares cease to be subject to certain restrictions within five years of acquisition.

Lifting of Restrictions

Further income tax and social security contributions will be due on the percentage discount that was not taxed at the time of acquisition.

Sale

Capital gains tax will be due on the difference between the sale proceeds of the shares and the amount on which the employee paid income tax, plus any amount paid for the shares.

Alternative Tax Treatment

As an alternative, the employer and the employee can make a joint election under which they agree to pay income tax and social security contributions on acquisition on the market value of the shares at that time, ignoring restrictions, less any amount paid for the shares. No further income tax would then be due when the restrictions lift, and, on sale, capital gains tax would be due on the increase in value between acquisition and sale.

The employer will be required to withhold income tax and employee social security payable on share options/conditional awards/restricted shares and pay employer social security.

The local employer can obtain a statutory corporate tax deduction for any shares delivered to its employees if certain conditions are met, including, at a high level, that the employer must be within the charge to UK corporation tax, the shares are acquired because of the employment, the shares are fully paid up and non-redeemable ordinary shares in the employer or a 51% parent company of an employer, and the shares are in a company not under the control of another company, unless, generally speaking, either company is listed on a recognised stock exchange.

It may be able to claim a deduction for other costs incurred in relation to a plan, but this will depend on meeting certain conditions, including being able to show that the costs were incurred wholly and exclusively for the purposes of the trade, profession, or vocation of the company.

There are four tax-favourable plans available in the UK, which are outlined below.

Discretionary

Company Share Option Plan (CSOP)

CSOP is a tax-favourable share option plan that can be offered by a listed company or a company not under the control of another company (unless it is listed).

• Options over shares are granted with an option price equal to the market value of shares at grant.
• Options usually vest and become exercisable after three years, and often remain exercisable for up to ten years from the grant date, depending on whether the employee remains employed with the company.
• No income tax or social security contributions are due if the options are exercised on or after three years from grant. There are certain exceptions to this for individuals who leave in certain circumstances, for example, due to death, when the option can be exercised earlier, still with the tax benefits mentioned.
• Each employee can only hold unexercised options over a maximum of GBP60,000 worth of shares calculated by reference to the shares’ market value at grant.
• A company will need to self-certify to HMRC that the plan meets the conditions of the tax legislation.

Enterprise Management Incentives (EMI)

EMI is a tax-favourable share option plan that can be offered by independent companies with fewer than 250 full-time employees, and assets of GBP30 million or less. There are also complex requirements about the type of activity performed by the company and its group.

• Options over shares are granted with an option price equal to the market value of the shares at grant.
• No income tax or social security contributions arise if the options are exercised while the EMI conditions are met. If there is a ’disqualifying event’, an option can be exercised within 90 days free from tax and social security contribution. After that, income tax is charged on any amount by which the market value of the shares on exercise exceeds their market value immediately before the disqualifying event. A disqualifying event includes the company no longer being independent or the trading requirements no longer being met.
• Each employee can hold share options up to the value of GBP250,000 in a three-year period. A company can only grant EMI options over a maximum of GBP3 million worth of shares.
• The plan must be notified to HMRC online by 6 July after the end of the tax year of grant.

All-Employee

A listed company or a company not under the control of another company (unless it is listed) can decide to offer an all-employee tax-qualifying arrangement to its employees. It must be offered to all UK employees of companies selected to participate.

A company will need to self-certify to HMRC that the plan meets the conditions of the tax legislation.

Sharesave or Save As You Earn (SAYE)

Sharesave is an all-employee share option plan.

• Employees can choose to save a certain amount (up to GBP500 per month) over a three- or five-year period, using a savings provider approved by HMRC under an approved savings contract.
• Employees are granted an option over the maximum number of shares that could be acquired using those savings, at a price equal to the market value of the shares when the option is granted, discounted by up to 20%.
• A tax-free bonus may also be payable at the end of the savings period, depending on the current rate set for SAYE by the Bank of England.
• At the end of the savings period, an employee can choose to keep their savings or use their savings to pay the exercise price of the option.
• On exercise of the option, no income tax is payable if it is on or after the third anniversary of grant, or in certain limited good leaver circumstances. No social security contributions are payable on exercise of an SAYE option.

Share Incentive Plan (SIP)

A SIP is an all-employee share purchase and free share plan.

• Employees can (i) be awarded shares for free (“free shares”) up to a value of GBP3,600 per year; (ii) purchase shares using pre-tax salary (“partnership shares”) up to a value of GBP1,800 per year; (iii) receive up to two free shares for each partnership share acquired (“matching shares”) up to a value of GBP3,600 per year; or (iv) acquire shares using dividends paid on any SIP shares (“dividend shares”).
• To receive the shares free of income tax and social security contributions, the shares must be held in a specific UK resident SIP trust for five years, although certain good leaver exceptions apply. The exact tax treatment will depend on the type of shares and length of time in the trust.
• No capital gains tax is charged on the shares’ increase in value while they are held in the SIP trust and the SIP trust acts as a capital gains tax “shelter”.

It is possible to apply malus and/or claw-back to share or cash awards (including bonuses) in the UK.

UK-listed companies are expected, under the UK Corporate Governance Code applicable to UK-listed companies, to include malus and claw-back provisions in performance-related remuneration for directors. It is therefore very common for public companies to have malus and claw-back provisions in incentive plan rules and other documents. In addition, the UK regulators in the financial services sector continue to expect firms to have malus and claw-back policies in place and for them to be suitably broad in terms of trigger events and terms for use.

The ability to enforce the provisions is increased where employees have specifically and explicitly agreed to the terms when an award is granted or in another document/format and when there is a clear process and policy in place for how and when the provisions will be enforced (and this is followed in practice). The triggers for use of malus and claw-back should be defined and clearly set out. It is clear that the right process and documentation are an important part of a company’s malus and claw-back armoury and there has been a successful challenge in the UK courts to the enforcement of malus and claw-back where proper process was not followed, regardless of the fact that the circumstances may have merited remuneration adjustment.

There are four points to consider from a UK labour law perspective, as outlined below.

Acquired Rights

There is a risk that employees who participate in the plan on a regular basis argue that they have acquired a right to continued participation in the future, especially where the value received under the plan has been consistent. This risk is reduced by wording in the plan documents stating that the plan is discretionary and does not give rights to further entitlements.

Compensation on Termination

In a successful unfair dismissal or discrimination claim, a UK court can take into account loss of entitlements and benefits that would have accrued to the employee under the plan when calculating compensation.

Trade Union/Works Council

If there is a local trade union, the consultation and approval requirements in relation to the plan will depend on the specific terms of the agreement with that union.

Discrimination

The selection of participants and use of any discretion more generally under the plan should be based on objective criteria and not involve any element of discrimination on the grounds of protected characteristics such as age, sex or ethnicity.

UK-listed companies are expected to develop a formal policy for post-employment shareholding requirements for their directors and impose a post-vesting holding period. These expectations are contained in the UK Corporate Governance Code and therefore most UK-listed companies will comply. It is normal for the post-vesting holding period to be two years, where there is a three-year period between the grant and vesting of an award, as the expectation is for a combined vesting and holding period of five years. The expectation is that there will be a post-employment shareholding requirement for two years after termination and executives are expected to hold the lower of what they actually held on termination and what they were expected to hold under the general in-employment shareholding policy. 

In the financial service sector, there is a requirement that for certain senior individuals (known as “material risk takers” as they are the individuals who can have an impact on the risk profile of a firm), their incentives are subject to a post-vest holding period. This is usually between six and 12 months. This requirement currently applies to all variable remuneration whether paid upfront or deferred. However, the UK regulator is currently consulting on whether to abolish the requirement for a post-vest holding period for deferred remuneration and this area may develop in the future.

Under the UK data protection rules, it is difficult to rely on employee consent as the grounds for processing data in connection with a share plan. Instead, for most companies, the two most common grounds in the context of incentive plans are that the processing of data is (i) required for the performance of a contract or (ii) necessary for the legitimate interests of the issuer or the local employer (being to operate the share plan to incentivise employees).

The issuer or the local employer should provide employees with a data privacy notice that explains the alternative bases for data processing and provides other information required by the rules both for the share plan and in the employment context more generally.

There is no legal requirement to translate cash or share plan documents into the local language for employees in the UK.

Public Companies

UK Listing Rules

The rules require shareholder approval for the adoption of a long-term incentive scheme (as defined in the UK Listing Rules) in which its directors can participate or where new shares can be issued to satisfy awards granted under the plan. To obtain shareholder approval, the rules set out that certain information must be provided to shareholders before they are asked to approve the plan. The rules also require disclosure if any shareholder waives dividends, and this can often capture a trustee of a discretionary employee benefit trust.

UK Corporate Governance Code (the “Code”)

The Code applies to all companies listed on the London Stock Exchange, including overseas companies. The Code includes provisions relating to remuneration, including that:

• A remuneration committee should be established, and the Code includes details on the composition of the committee. The remuneration committee should have delegated responsibility for determining executive remuneration.
• Remuneration schemes should promote long-term shareholdings by executives, with a total vesting plus holding period being at least five years and a policy for post-employment shareholding.
• Malus/claw-back provisions should be included in performance-related plans for executive directors.
• The annual report on remuneration should include a description on malus and claw-back and a description of the work of the remuneration committee, including details on any discretions exercised on remuneration.

The Code has a “comply or explain” policy which means that companies can deviate from the requirements in the Code provided that they provide shareholders with an appropriate explanation as to why taking a different approach to the Code is in the interests of the company and its shareholders.

Investment Association (IA) Principles of Remuneration

The IA is a representative body for institutional investors. The IA Principles of Remuneration are published every year, and, while they are not mandatory, companies with a large institutional shareholder base generally follow them. Among other factors, the IA principles of remuneration include expectations around dilution limits for share plans, the length of a deferral and holding period and share plan structures.

Private Companies

Private companies incorporated in the UK are not subject to the Code but there is the Financial Reporting Council’s Wates Corporate Governance Principles for Large Private Companies, which provide a voluntary set of corporate governance principles and framework for large private companies.

Banks, Building Societies and Investment Firms

All banks, building societies, and investment firms (as defined under the Capital Adequacy Directive (2006/49/EC) (CRD IV)) are subject to a remuneration code and/or the Remuneration Part of the PRA’s Remuneration Rules, as implemented by the UK’s regulators, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) (together, the “Remuneration Codes”).

Firms covered by the Remuneration Codes must establish, implement, and maintain remuneration policies, procedures, and practices that are consistent with and promote effective risk management. The Remuneration Codes include a number of requirements, including in relation to the deferral of annual bonuses and other variable remuneration, the delivery of variable pay in shares or other instruments, and the application of malus and claw-back.

Similar remuneration rules also apply to:

• investment fund managers under the Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD);
• undertakings for collective investment in transferable securities (UCITS) under the UCITS V Directive (2014/91/EU);
• insurers and reinsurers under the Solvency II Directive (2009/138/EC); and
• MiFID investment firms and collective portfolio management investment firms under the Investment Firms Prudential Regime (IFPR).

A reporting and voting regime for directors’ remuneration applies to UK-incorporated companies listed on the LSE, an EEA-regulated exchange, the NYSE, or NASDAQ (quoted UK companies) and unquoted trading companies.

The directors’ remuneration report must contain the following separate parts:

• a statement by the chair of the remuneration committee, which explains what the committee has done in the previous financial year and why this was appropriate for that particular company;
• a forward-looking section on proposed remuneration policy, including:
1. a “future policy table” with a description of each element of the remuneration package and how future remuneration policy relates to the company’s strategic objectives;
2. estimates of future payouts based on different performance scenarios; and
3. the policy for termination payments and for hiring new directors;
• a backward-looking section reporting on the implementation of the remuneration policy in the relevant financial year, including:
1. the total remuneration of each director shown as a single figure; and
2. details of termination payments paid to directors.

There must be a binding shareholder vote on directors’ remuneration policy at least every three years. Once the policy has been approved, only remuneration that is compliant with that policy can be paid. If a company wishes to change its remuneration policy (or to make a non-compliant payment) within that three-year period, it must seek re-approval for that revised policy/payment from shareholders. Directors authorising any payment in breach of these rules will be liable to indemnify the company for any loss resulting from their actions.

There is also an annual advisory shareholder vote on the implementation of the remuneration policy. If the advisory vote fails, this triggers a binding vote on the remuneration policy in the following year.