Companies Act 2014 section 1110M

Right to vote on remuneration policy

Section 1110M requires traded PLCs to prepare a directors' remuneration policy and submit it to a shareholder vote at a general meeting, with specific rules governing the consequences of binding and advisory votes, the required content of the policy, and the circumstances in which the company may temporarily depart from it.

• A traded PLC must prepare a remuneration policy for its directors and hold a shareholder vote on that policy at a general meeting, with the vote being advisory unless the company's constitution makes it binding.
• Where a binding vote rejects the policy, the company must prepare a revised policy for the next general meeting and, in the interim, pay directors under any previously approved policy or existing practices; an advisory vote rejection similarly requires a revised policy, but the company may continue paying under the voted or a previously approved policy regardless of the outcome.
• The remuneration policy must be clear and understandable, covering fixed and variable pay components, performance criteria, share-based remuneration, termination terms, clawback provisions, and an explanation of how the policy supports the company's long-term strategy and sustainability.
• A traded PLC may temporarily derogate from its remuneration policy only in exceptional circumstances necessary for the company's long-term interests, sustainability, or viability, and only in accordance with procedural conditions already set out in the policy itself.

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