In 2020, Romania introduced a requirement for listed companies to have a remuneration policy starting in 2021. Given the high transparency standards, especially for executive remuneration packages, complying with this legal requirement may prove rather challenging given that companies must submit a remuneration policy for their shareholders to vote on at their 2021 annual general meeting.
To help listed companies comply with the new requirements, the Romanian Investor Relations Association (ARIR), together with a group of experts (including lawyers, consultants and capital markets specialists) recently launched a set of best practices concerning the remuneration policy. These implementation guidelines aim to make it easier for Romanian companies (listed or not) to draft a remuneration policy.
Involved in writing these guidelines, our capital markets teams contributed especially to points related to area of application, corporate governance and the decision-making underlying the remuneration policy and its implementation. The guidelines also tackle aspects such as malus and claw-back provisions in remuneration policies, circumstances potentially justifying derogations from the remuneration policy, and provide examples of how the remuneration packages of executives and non-executives can be structured (with both a fixed and a variable component). They explain why deferring a portion of the variable remuneration whilst also granting part of the variable remuneration in shares or other share-based instruments may serve a company's long-term interests.
The guidelines give practical examples aimed at further clarifying certain legal requirements so that companies have all the tools to design a remuneration policy that is legally compliant and that reflects the company's values and ideas. The working group's starting point was to create a flexible and balanced instrument that acknowledges and respects the diversity of corporate governance systems and each company's unique business strategy, long-term interests and approach to remuneration.
The guidelines do not seek to create "standard remuneration policies" among Romanian companies, but rather to harmonise the level of information made available to the public so that information related to remuneration can be compared between companies and can be easily followed and understood by stakeholders (shareholders, potential investors, etc.). In the end, every listed (and unlisted) company is encouraged to use the guidelines according to its own needs and principles.
Note: Schoenherr Bucharest capital markets lawyers Narcisa Oprea (partner) and Silviu Lazăr (attorney at law) were among the contributors to the Remuneration Policy – Implementation Guidelines launched by ARIR. The document is available here for download (in Romanian).