Remuneration Survey 2020

23/09/20

Decrease in total direct compensation of executives; increased disparity between AEX and AMX/AScX companies

Last year's implementation of the Shareholders’ Rights Directive (SRD) makes the publication of this Executive and Non-executive Remuneration Survey 2020 even more interesting. One of our key findings is that Total Direct Compensation (TDC) levels have overall decreased and disparity between AEX and AMX, AScX companies has increased. The latter means that TDC in AEX companies is relatively high, implying a greater focus on pay for performance within AEX listed companies by using variable pay. Especially as base pay levels for AEX companies have only slightly decreased. It is likely that the impact of COVID-19 on executive pay will be more significant in companies with relative high variable pay.

How to engage with internal and external stakeholders

Stakeholder engagement and society’s opinion are more important than ever before. As a result of the SRD, almost all listed companies have submitted a new policy to the General Meeting of Shareholders (AGM) for a (binding) vote this year and the remuneration report was also subject to (advisory) voting.

This report may be used as a first step to validate your current executive pay policies and assess whether these are fit-for-future. The survey may also help you to engage with internal and external stakeholders on this topic, and/or topics that are strongly related to it. ‘Say on pay’ has increased since the implementation of the SRD. Due to the impact of COVID-19 on businesses and the broader workforce, executive remuneration is currently even more heavily scrutinized and part of broader societal discussions. This, together with new disclosure requirements and other regulations, has fueled discussions on sustainable pay, with increased focus on incorporation of ESG and SDG targets. Consequently, many companies are facing new challenges in appropriately managing their executive remuneration.

Diversity and equal pay

Equal pay not only focuses on the gender pay gap, but is also expanding towards broader related themes. Diversity is one of the 'Society' topics within ESG and has become a key concern to investors. In the UK there have been calls for similar regulations to help address the ethnicity pay gap, which is the gap between the average earnings of white British workers and their ethnic minority peers. These calls have become louder following a report by the Office of National Statistics (ONS), which was published in July 2019, and recent initiatives of the global ‘Black Lives Matter’ movement. In the Netherlands many listed companies are reporting on diversity to some degree, but for instance due to legislative changes this will further increase over time.

Determine your reward strategy

The Executive and non-executive remuneration survey 2020 is based on an analysis of the remuneration of executives and non-executives at Dutch listed companies (AEX, AMX and AScX) for the reporting year 2019. With the help of insights from the remuneration survey, organizations can determine their remuneration strategy. You can download the full report below. If you have any questions, please contact us to discuss matters in further detail.