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Eumedion - which represents the interests of institutional investors in the field of corporate governance and sustainability - commissioned Reward Value Foundation to conduct qualitative international research into the operation and effects of 'say-on-pay' legislation. This legislation gives shareholders of listed companies the power to vote on the remuneration of executives. One of the focus points of the research was whether the introduction of a binding - instead of an advisory - vote of the General Meeting of Shareholders on executives’ remuneration would lead to fewer remuneration excesses. France and Switzerland already have such a binding vote. One of the main insights of the study is that say-on-pay legislation does not lead to a reduction in remuneration excesses, but also that shareholders and supervisory directors should enter into dialogue about top remuneration and excesses more frequently and intensely and on an equal basis.

Rients Abma, Executive Director at Eumedion: “Last year, we found that supervisory directors of Dutch listed companies hardly act on a negative voting advice from shareholders about the company’s remuneration report. This prompted us to further investigate.” Research was conducted on say-on-pay legislation and its impact on shareholder rights in France, Switzerland, the United Kingdom, the United States and Australia. “Our research shows convincingly that more legislation is not the best way to achieve more discipline of supervisory directors and fewer excesses. Listening to each other and making better use of existing rights seem to be more effective. For us, it was reason to tighten up our voting guidelines on the reappointment of supervisory directors. We are also currently considering the desirable content of service agreements with executives.”

Frederic Barge, founder of Reward Value Foundation, which conducted the research: “The conclusion is that a structural dialogue about top remuneration and excesses between shareholders and companies is necessary. The study cannot conclude that a legally binding vote to this effect has the desired effect. However, shortcomings have been identified in the current regulations that play a role in several countries. This should be looked into at European level.”