Directors’ remuneration should not be subject to EU legislative restriction

The EU should not legislate to impose a Europe wide one-size-fits-all restriction on directors’ remuneration, according to the Chartered Institute of Personnel and Development (CIPD), the professional body for all those involved in people management and development.

Responding to the Internal Market Directorate General (IMDG) consultation document: Fostering an appropriate regime for the remuneration of directors, the CIPD stresses that national governments should be left to put in place a minimum-legislative framework to set boundaries and prevent abuse.

Charles Cotton, Reward Adviser at the CIPD, said:
EU-level legislation on this matter is not necessary. National provision can do the job more effectively.

There has to be a careful balance to ensure that remuneration packages meet the needs of the organisation, its directors and its shareholders. A one-size-fits-all legislative approach could disturb this balance. We support reward transparency, but not requirements for businesses to adopt remuneration strategies or practices that are not in their interests.

Companies need to be free to remunerate directors in a way that will attract and retain the best people for the job, and that meets the individual circumstances of their own organisation.