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16 November 2017 • Articles

Ethical Boardroom

Remuneration practices in 2017

"Executive remuneration is increasingly perceived by stakeholders as a window into how the board sets the strategy and how it motivates management.
The say-on-pay votes have thus assumed greater importance. Remuneration policies and practices are required to be in line with the business strategy and not encourage risk-taking. The engagement between companies and investors is still a key driver for the development of sustainable remuneration practices and long-term value creation," has commented Fabio Bianconi, Director Morrow Sodali, on Ethical Boardroom.

"A cross-border analysis reveals increasing shareholder support towards management compensation, but issues do persist."

"While shareholder engagement on compensation resolutions has historically come into play during proxy campaigns only as a result of negative voting recommendations from proxy advisory firms, good disclosure and early communication with top holders should be set as a company’s strategy to demonstrate alignment with long-term shareholder interests and to mitigate future shareholder concerns."

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