Proposed rules would tighten executive remuneration at listed companies in the Netherlands and give works councils more influence on pay. These are some of the amendments following the recent vote and debate in the Second Chamber of the Dutch parliament on a bill implementing the European Shareholder Rights Directive. In another amendment, listed companies formulating their remuneration policy must describe how public support was taken into account. The bill will now go to the First Chamber. The European directive must be implemented into Dutch law by 10 June 2019, but it is uncertain whether this deadline will be met. We will closely follow the parliamentary process and provide more extensive guidance on what steps companies should take as soon as the text of the bill is final.

The most significant amendments that the Second Chamber voted in favour of are:

• A supervisory director at a large company governed by the structure regime automatically becomes a member of the company's remuneration committee if he or she was appointed to the supervisory board on the works council's recommendation;
• Companies may only submit their remuneration policy to the general meeting for approval after the works council has had the opportunity to share its views and give advice on the proposed policy. An explanation has to be given to the general meeting if the proposed remuneration policy deviates from the works council's advice. The works council chairman has the right to speak in the general meeting;
• A majority of at least 75% of the votes cast at the general meeting is needed to approve the remuneration policy. However, the company's articles of association may set a lower majority as a threshold;
• The remuneration policy needs to contain a "stakeholder-oriented" explanation on how public support was taken into account when formulating the policy; and
• All listed companies must submit the remuneration report annually to the general meeting for an advisory vote. Under a previous legislative proposal, small and medium-sized companies only had to submit their remuneration report to the annual general meeting for discussion.

Click here for the Shareholder Rights Directive and here for our previous In Context article about the implementing bill.