How to deal with shareholders’ dissent on say-on-pay?


Most companies held their annual general meeting for the financial year 2021 by now. At this occasion, shareholders expressed their view on the company’s pay practices through their advisory vote on the remuneration report and, where appropriate, their binding vote on the remuneration policy. What if shareholders acceptance in their policy and/or report voting is poor? How should boards address shareholders’ negative feedback?

Dissension on the remuneration policy

The remuneration policy needs to be approved by the shareholders at the general shareholders meeting at least every 4 years or at the occasion of every material change to the policy. As the vote is binding, directors can only receive remuneration in accordance with the company’s approved remuneration policy.

The Code 2020 on Corporate Governance for listed Belgian companies states that the company should consider adapting its remuneration policy when a significant proportion of the votes are cast against the remuneration policy at the annual general meeting (principle 7.3). The term significant is however not further clarified. According to Glass Lewis, actions need to be taken to address shareholders’ concerns when 20% or more of the votes cast by minority shareholders were not in favor of the proposed policy.

Dissension on the remuneration report

The remuneration report provides an overview of the effectively paid remuneration of the previous year. By their advisory votes, shareholders are given the opportunity to provide their feedback on the appropriateness of directors’ remuneration arrangements and the level of transparency in the remuneration report.

While there are currently no precise guidelines on the way companies should react to shareholders dissent on the remuneration report, one should bear in mind that it still signals a dissension view on the company’s pay practices. It is therefore not advisable to ignore it. Not only can it be seen as a weak governance in pay and damage the company’s performance, but inaction may also have an impact on the shareholders’ vote on other matters (e.g. the discharge of directors).

Further, Belgian listed companies are required to explain how the votes of shareholders and their feedback on the remuneration policy and the remuneration report have been taken into account when a revised remuneration policy is presented at the votes of shareholders (art. 7:89/1, §2, 7° of the Belgian Code on Companies and Associations). A high level of shareholder’s acceptance is therefore helpful in this context.


An open and transparent dialogue with shareholders on remuneration and governance is key to identify the reasons for the dissenting votes and determine relevant actions.
Determining an appropriate remuneration package for executive and non-executive directors presents several challenges and is an evolving task. Remuneration Committees have to navigate between legal, tax and social security considerations, while meeting more and more demanding expectations of shareholders and investors, yet the package has to be competitive in the market to attract and retain the best candidates.

Want to know more about how our Reward experts can help you in addressing your shareholders feedback and revamping your executive remuneration policy? Please contact Christiaan Moeskops or Bart Van den Bussche.