The listed companies on the Bucharest Stock Exchange published for the first time the individual remuneration of the management following the EU Directive requirements


Since last year, all the companies listed on the Bucharest Stock Exchange (BVB) have published remuneration policies, once the incidental national framework has come into force, following the transposition into national law of Directive (EU) 2017/828 on encouraging the long-term shareholder engagement, through with are established new standards of transparency regarding the remuneration of any member of the Board of Directors/ Supervisory Board, as well as the company’s management.For more developed EU markets, the reporting of management salaries and bonuses is a natural practice. The best practices target not only the form, but also the substance, requiring a clear distinction between the fixed and the variable component for the compensation of the executive team, a clear distinction between short-term and long-term compensation, performance indicators and weights based on which payments are made to the executive members.

Such a requirement has been introduced in VEKTOR methodology since 2019, the indicator of transparency and communication for companies listed on BVB, calculated by ARIR, the only association specialized in Investor Relations from Romania, a community of companies listed on the Bucharest Stock Exchange. The introduction of the remuneration policy criterion in the methodology was made at the request of the investors and anticipating the legal requirements. We organized an extensive working group with lawyers and issuers, governance experts, we published a Guideline for the implementation of the remuneration policy and report and we were in constant dialogue with the Financial Supervisory Authority. Therefore, from 12 companies that had a remuneration policy according to VEKTOR requirements, in the first year when it was not yet mandatory, we observe an increase of the number of companies by almost 5 times, up to 54 at the end of 2021, out of an estimated total of 77 companies from the main market of BVB. The number of the listed companies that have published a remuneration policy is higher that the scored ones, but they do not meet the exact requirements according to VEKTOR methodology.

A broader picture of the company’s management vision for the benefit of shareholders and other stakeholders is created now by requiring the listed companies to submit a remuneration policy to shareholders at the General Meetings of shareholders, as well as to prepare annually a clear and easy-to-understand remuneration report, . Press attention was on the remuneration reports and the information included, being revealed even the highest salary in Romania at one of the recently listed companies.
Of interest to practitioners were the divergent opinions on competition, from listed and unlisted companies in the same industry, on confidentiality for managers, but also on the exchange of rules during the game, topics discussed in the community and in public at dedicated events.

In any case, we are talking about an impressive leap compared to 2019, a consistent transparency effort from companies’ side, appreciated by investors. However, the phenomenon is just beginning. Following the publication of the remuneration policy last year, in 2022 there was a first exercise in reporting the nominal remuneration, for all managers, of all elements of the remuneration that can be granted to management, with distinction between fixed and variable remuneration, mentioning their relative proportion, performance criteria for variable remuneration, both financial and non-financial, including ESG criteria. A period of harmonization of the information provided by companies will follow, a process in which ARIR will be involved, in dialogue with its members and ASF.

The article is wrtitten by Daniela Șerban, ARIR President


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