Remuneration of Directors (Recommendation)

With the latest Recommendation C(2009) 3177 of 30. April 2009 the Commission revises the already existing Recommendation 2004/913/EC and 2005/162/EC regulating the remuneration of directors of listed companies. While the existing Recommendations focus on the procedures and responsibilities when fixing the remuneration of directors the Commission now intervenes into the design of remuneration agreements. The Commission mainly wishes remuneration to be based on performances in the future and generates incentives to ensure the medium and long-term economic sustainability of companies. In particular, the Recommendation contains details on variable components of remuneration and termination payments.

cepPolicyBrief

The Commission's Recommendations are non-binding. Whether or not, and how Member will transpose them into national rules is left to their own discretion. If Member States decide to adopt such rules they should have in mind that they constitute a severe intervention into the freedom of contract and an inappropriate degree of paternalism of the supervisory boards and shareholders.