How should a constructive dialogue between investors and companies on remuneration systems be set up? What expectations do companies have from investors regarding the engagement process and their voting behaviour?
3.1. Regular dialogue about remuneration shall take place with investors, particularly in the event of material changes to the remuneration system. The dialogue should take place sufficiently in advance of the next annual general meeting (generally no later than six months before the meeting).
Explanation: Shareholder advocacy groups representing retail investors and proxy advisors should be included in the dialogue.
3.2. Particularly in the event of a negative vote or when there is a significant number of negative votes (higher than 25%) on the remuneration system at the annual general meeting, companies should discuss the critical remuneration elements in a dialogue with investors.
3.3. Institutional investors, asset managers, proxy advisors, shareholder advocacy groups representing retail investors and other relevant shareholders should publish their expectations on management board remuneration systems and make their engagement process transparent to document the exercise of their fiduciary obligation.