ICGNInternational Corporate Governance Network

Pérez Rodríguez, MónicaRodero Manso, InésSuárez Fernández, Olaya2nd course – Business Administration

The ICGN Non-executive Director Remuneration Guidelines and Policies

They include key policy and design features

Their objective is to help communicate investors´ perspectives .

Addressed to companies and their non-executive board members

The ICGN considers that compensation plans can provide supplemental means of obtaining long-term equity holdings.

They are supported by the belief that they attract and retain highly qualified candidates and align directors' interests

Expensing of Stock Options and

Share-based Remuneration Expensing of stock options is a method of accounting for the

value of share options, distributed as incentives to employees. Share-Based Remuneration is a transaction in which the

entity receives or acquires goods or services either as consideration for its equity instruments or by incurring liabilities for amounts based on the price of the entity's shares or other equity instruments of the entity.

accounting requirements : how the transaction will be settled

Methodology for determining payments andguidance in relation to remuneration

For determining payments is recommended:Valuation based on comparable instruments or valuation models, expensing over

relevant vesting periods and recognition of any subsequent repricing of the instruments.

Guidance:Transparency: investors should be able to clearly understand the NEDs remuneration

programme and see total remuneration for NEDs.Accountability: the Remuneration Committee should annually review total

remuneration.Alignment of interests between NEDs and shareholders: Companies should have the

flexibility to set and adjust the ratio of equity and cash based remuneration as appropriate.

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