Belgium has announced an update to its 2004 comply or explain corporate governance code. The new code attempts to deal with some of the issues flagged up by the current economic crisis with a particular emphasis on  say on pay disclosures.

The proposals include publishing a remuneration policy, detailed information for the earnings of each executive director with a split between basic pay, bonuses, pension payments, and other benefits. The targets and incentives that determine whether bonuses are paid will also be disclosed. Severance payments are addressed with a requirement that payoffs for CEOs or other executives should not exceed one year’s basic pay and bonuses.

The changes are not solely focussed on pay issues.  Fundamental structural issues such as board responsibilities for internal control and risk management are addressed as well as a recognition of the importance of  board committees.

Commenting on the new code, Herman Daems, Chairman of the Corporate Governance Committee said: “With the eruption of the financial crisis in September 2008, there was a great deal of criticism of corporate governance codes. Many felt that the lawmakers should be involved. In this context, the Committee wants to reaffirm its belief that a well-developed and transparent system of recommendations complementing existing legislation is the best solution. The revised code “will make a considerable contribution to bolstering investors’ trust in Belgian listed companies,” he said.

Investors can expect to see the impact of the changes in the early part of 2010 as the code changes applies to reporting years beginning on or after Jan. 1, 2009.

For more information:
Christine Darville
Secretariaat van de Commissie Corporate Governance
Phone number: 02 515 08 59
e-mail: secretary@corporategovernancecommittee.be