Questions & Answers
(1) Should individuals on parental leave, long-term sick leave or long-term special leave who receive less than their regular total annual remuneration be excluded from the annual total remuneration calculation considering long-term leave as a consecutive period of at least three months?
(2) When computing the annual total remuneration, do we consider the same salary components for both the highest paid individual and the employees (e.g. benefits in cash / benefits in kind)?
- Annual total remuneration
Background
ESRS S1 paragraph 97 states: ‘The disclosure required by paragraph 95 shall include: …
(b) the annual total remuneration ratio of the highest paid individual to the median annual total remuneration for all employees (excluding the highest-paid individual); and
(c) where applicable, any contextual information necessary to understand the data and how the data has been compiled and other changes to the underlying data that are to be considered.’
ESRS S1 paragraph AR 101 states: ‘When compiling the information required by paragraph 97(b), the undertaking shall:
(a) include all employees;
(b) consider, depending on the undertaking’s remuneration policies, all of the following:
i. base salary, which is the sum of guaranteed, short-term, and non-variable cash compensation;
ii. benefits in cash, which is the sum of the base salary and cash allowances, bonuses, commissions, cash profit-sharing, and other forms of variable cash payments;
iii. benefits in kind, such as cars, private health insurance, life insurance, wellness programs; and
iv. direct remuneration, which is the sum of benefits in cash, benefits in kind and total fair value of all annual long-term incentives (for example, stock option awards, restricted stock shares or units, performance stock shares or units, phantom stock shares, stock appreciation rights, and long-term cash awards).’
Answer
(1) Should individuals on parental leave, long-term sick leave or long-term special leave who receive less than their regular total annual remuneration be excluded from the annual total remuneration calculation considering long-term leave as a consecutive period of at least three months?
The annual total remuneration ratio shall include all employees, as explicitly stated in ESRS S1 paragraph AR 101 (a). The undertaking may disclose its methodology used to compute the remuneration ratio in ESRS S1 paragraph AR 102 and explain the number or percentage of individuals on leave as contextual information.
(2) When computing the annual total remuneration, do we consider the same salary components for both the highest paid individual and the employees (e.g. benefits in cash / benefits in kind)?
ESRS S1 paragraph AR 101 (b) further explains which types of remuneration shall be included in the calculation (depending on the undertaking’s remuneration policies). The same components shall be considered for both the highest paid individual and the median total remuneration of employees.
Relations
Paragraph | Content |
|---|---|
When compiling the information required by paragraph 97 (b), the undertaking shall: | |
the annual total remuneration ratio of the highest paid individual to the median annual total remuneration for all employees (excluding the highest-paid individual) ; and | |
where applicable, any contextual information necessary to understand the data and how the data has been compiled and other changes to the underlying data that are to be considered. | |
When compiling the information required by paragraph 97 (b), the undertaking shall: | |
where applicable, any contextual information necessary to understand the data and how the data has been compiled and other changes to the underlying data that are to be considered. | |
the annual total remuneration ratio of the highest paid individual to the median annual total remuneration for all employees (excluding the highest-paid individual) ; and | |
When compiling the information required by paragraph 97 (b), the undertaking shall: | |
the annual total remuneration ratio of the highest paid individual to the median annual total remuneration for all employees (excluding the highest-paid individual) ; and | |
When compiling the information required by paragraph 97 (b), the undertaking shall: | |
the annual total remuneration ratio of the highest paid individual to the median annual total remuneration for all employees (excluding the highest-paid individual) ; and |