Amendment to the Act on Public Offering and Conditions Governing the Introduction of Financial Instruments to Organized Trading and on Public Companies imposes on the companies listed on the WSE an obligation to adopt new remuneration policy for management and supervisory board members until 30 June 2020.
Remuneration of management and supervisory board members must be public from 30 June 2020
The provisions introducing the obligation to adopt a public policy concern the remunerations of management and supervisory board members of public companies with shares admitted to trading on a regulated market. Banks, brokerage houses, investment funds companies, administrators of Alternative Investment Companies and companies listed on the New Connect market are released from this obligation.
NOTE! Deadline for adoption of new policy – 30 June 2020. Failure to meet this obligation may result in administrative sanctions.
Remuneration policy – obligations for companies
The amended act lays down rules concerning adoption of remuneration policy for management and supervisory board members of public companies listed on the WSE such as:
- adoption of policy exclusively in the form of a resolution of the general meeting of shareholders,
- adoption of a resolution at least once in 4 years,
- adoption of separate resolution with respect to each material change of the existing policy,
- publishing without delay on the company website the adopted resolution and the policy,
- publishing the resolution and the policy on the website until they have been changed or their terms have expired,
- obligation of the supervisory board to draw up an annual report with comprehensive statement of remunerations,
- compliance of the adopted policy with the company business strategy and interests,
- only paying remunerations which comply with the adopted remuneration policy,
- list of conditions for acquisition of entitlements to remuneration in the form of financial instruments,
- possibility of temporal departure from the remuneration policy by a decision of the supervisory board, but only in a situation when it is necessary for the accomplishment of long-term objectives of the company.
Read also: Dematerialisation of shares – new obligations for non-public companies
Contents of the remuneration policy
The remuneration policy for management and supervisory board members in public companies listed on the WSE must be adopted by a resolution of the general meeting of shareholders, and the management board members are liable for its contents.
According to the amendment, the remuneration policy should contain the following information:
- list of all monetary and non-monetary elements of remuneration of the management and supervisory board members with specification of their proportions and award criteria,
- relation of pay and work conditions of the management and supervisory board members to the remaining employees of the company,
- list of terms, along with notice periods, of the contracts whereunder the management and supervisory board members exercise their functions (regardless of their legal form),
- description of retirement and disability pension schemes,
- description of the process of establishment, implementation and review of remuneration policy,
- description of measures to prevent conflicts of interest related to the adopted remuneration policy,
- how the adopted policy and remuneration criteria will contribute to achieving the company objectives,
- list of methods assessing the effectiveness of the adopted remuneration criteria,
- list of the introduced changes comparing to the previous remuneration policy,
- rules of selling financial instruments awarded to the management and supervisory board members as part of their remuneration,
- information concerning periods of pay deferment and possibility to demand return of variable remuneration by the company,
- rules of potential temporary departure from the adopted policy.
Report on remuneration
The amended regulations impose on supervisory boards of public companies listed on the WSE an obligation to draw up annual reports on remuneration for each member of the management and supervisory board paid out in the last financial year and to adopt a resolution of an advisory nature on adoption of such report.
The supervisory board members are liable for the contents of the report which should specify:
- total remuneration of management and supervisory board members with proportions and criteria applied to elements of these remunerations,
- number of financial instruments allotted and offered as part of remuneration together with their price and date of allotment,
- information on variation of company results and the average remuneration of employees not being members of the management or supervisory board, for no less than the last five financial years, displayed in the manner allowing their comparison,
- information on monetary and non-monetary benefits constituting part of remuneration, awarded to persons related to the members of the management and supervisory boards, this group includes spouses, ascendants, descendants, brothers and sisters, persons related by affinity in the same line or degree, cohabitants, adoptees and their spouses.
NOTE! No personal data of persons concerned can be listed in the reports.
The following entities do not have to adopt resolution approving the report on remuneration:
- small units specified in the Accounting Act of 29 September 1994,
- companies other than small units which in the financial year in which they commenced activity or keeping accounting records met at least two out of the following three conditions:
- total balance assets at the end of financial year not exceeding PLN 127,500,000,
- net revenues from the sale of goods and products at the end of financial year not exceeding PLN 255,000,000,
- annual average employment in full time equivalents not exceeding 120 persons.
The above economic entities may discuss the remuneration report at the general meeting instead of adopting a resolution.
IMPORTANT! Report on remunerations is subject to assessment by a chartered auditor in the scope required by law.
Another obligation of the companies includes publishing and rendering available for free on the company website the approved reports on remunerations for no less than 10 years from the general meeting which approved the report.
The companies must draw up the first report on remunerations in the form provided for by the law for the year 2019 and 2020.
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