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New Act to require listed companies to lay down guidelines for executive incentives
As part of the Danish Government's drive for greater transparency of executive pay packages, the Danish Commerce and Companies Agency sent out to consultation earlier this year a Bill to require listed companies to lay down guidelines for their executive incentive schemes. The resultant Act was passed on 1 June 2007.
As a result of the Act, boards of listed companies are now required to develop a set of general guidelines for the executive incentive schemes operated by the company. Incentive schemes include variable remuneration and thus both share-based and non-share based incentives. The guidelines must be submitted to and approved by the general meeting before any individual packages can be offered.
The guidelines must contain the following minimum information:
- Eligibility criteria
- Incentives available
- Main terms and conditions
- Estimated current value of incentives
- Any timing constraints, eg exercise dates or other relevant dates
The Act does not cover staff incentives and nor does it regulate what types of incentive schemes can be operated by listed companies; it simply ensures that the general framework of such schemes has been approved by the general meeting.
The Act as such commences on 1 July 2007, but will not become operative for individual companies until after their next general meeting following 1 July 2007.
For further information please contact
Jens Lund Mosbek
T +45 35 25 39 40