Remuneration

Director remuneration In Belgium generally consists of several parts: a base fee and a board meeting fee, plus a committee member base fee and a committee meeting fee.

How these components are weighted depends on individual company remuneration policies. Remuneration detail was measured at our 31 December 2023 cut-off date for inclusion.

About 60% of companies pay both a base and a meeting fee to their NEDs, a proportion that is unchanged from last year. 37% pay only a retainer, and one company pays only a meeting fee.

For chairs, 60% of the companies under review pay a retainer only, marking a 10% increase from last year’s 50.8%. 32% of companies also pay a meeting fee and 8% pay shares.

Average total NED remuneration across both indices increased to €50 732, from €47 500 in 2022. Comparing the two indices, the average Bel 20 remuneration is €62 287 and €44 313 for the Bel Mid directors.

The highest average total NED remuneration is €100 000, seen at the Bel Mid constituent, Euronav. The figure reflects NED board meeting attendance fees of €10 000 per meeting (capped at €40 000), representing the highest rate paid among all companies under review.

The lowest overall average attendance fee is €10 500, recorded at Brederode.

If we break out the remuneration components, the average fixed fee for both indices is at about €39 056 and the per meeting fee is €1 472. In the Bel 20, the fixed fee component is €49 000, compared to €33 532 in the Bel Mid. The per meeting fee in the Bel 20 is €1 615 and in the Bel Mid it is €1 391.

Chairs

Four companies did not disclose their chair remuneration policy. Among our sample, the average chair total fee is €117 079.

For Bel 20 chairs, the average total fee is €131 226, marking a 6.5% decrease from 2022’s €140 619. For Bel Mid chairs, the average total fee is €102 932, a 9% decrease from €113 591 last year.

Half of the companies under review paid only a fixed base fee to the chair; 42% of companies paid both a fixed retainer and an attendance fee per meeting. The average fixed retainer for the chair is €104 573. Among companies that pay an additional attendance fee per meeting, the average for the chair is €3 278.

Vice chairs

11 companies in 2023 have a designated vice chair (six of which are in the Bel 20 and five in the Bel Mid). Five of these 11 remunerate their vice chair at a rate higher than the NED fee. The average total vice chair fee (base and additional fees) is €94 696.

Committee remuneration

As with overall remuneration, committee remuneration can be paid as a base fee, a fee per meeting, or a combination of the two. Across all committees in 2023 the average total remuneration for chairs is €17 538 in 2023, and for committee members €11 669.

Audit committee

In terms of fixed remuneration, the average retainer paid to audit committee chairs in 2023 was €11 578, up 29% from €8 947 in 2022. The average retainer paid to audit committee members was €4 912, a minimal change from €4 840 last year.

When we look at the meeting fees, the average meeting fee for chairs is €1 988, very slightly more than last year’s average of €1 850. The average meeting fee paid to members is €1 587, again slightly higher than 2022’s €1 360.

More than half of the companies in the sample do not allocate a fixed remuneration to their audit committee chair. Several companies do not allocate any remuneration to the chair, or at least do not disclose it.

Remuneration and nomination committees

Although not every company in our sample remunerates members of their audit committee, even fewer companies pay their remuneration or nomination committee members. As previously discussed, a significant proportion of companies combine these two committees.

Among companies that do maintain separate committees, average retainers for the chairs of the remuneration and the nomination committees are very close, at €3 859 and €3 781 respectively. The chair’s fee per meeting for 2023 averages €2 201 for the remuneration committee and €2 315 for the nomination committee.

Remuneration committee members receive average retainer fees of €2 662, alongside fees per meeting of €1 920. Nomination committee members are paid average retainer fees of €2 596, alongside fees per meeting of €1 854.

In companies where the two committees are combined, chairs receive an average retainer fee of €5 788, and average meeting fees of €1 158. Members of combined remuneration/nomination committees receive an average retainer of €3 938 and €1 054 as an average meeting fee.

Remuneration in shares

The 2020 Belgian Code on Corporate Governance provides in Principle 7.6 that NEDs “should receive part of their compensation in the form of shares in the company”. With that provision, Belgium is one of the few countries where listed companies are required (under the comply or explain principle) to include share-based elements in NED compensation.

This obligation was robustly argued during the Code’s adoption process. The main issues ranged from the potential weakening of NED independence and whether other means were available to ensure long-term NED alignment with shareholders, the proposals’ technically complexity, and that NEDs’ limited compensation levels meant that the impact of any scheme would be limited anyway.

Based on our review, the adoption rate of companies remains very limited. Indeed, among the 56 companies that form the Bel 20 and Bel Mid only six included a form of share-based compensation, down from 14 that did so in 2022. As in the 2022 Index, we again note that these schemes diverge greatly and do not often abide by the provision of the Code. For example:

• Some companies, such as Ackermans & van Haaren, or Cofinimmo, do not grant stocks but rather require their NEDs to acquire them;
• Some companies grant additional cash remunerations subject to the requirement to use the net amount (after taxes) to acquire shares;
• Some companies, such as Groupe Bruxelles Lambert (GBL) and Atenor, simply grant a number of shares to their NEDs;
• Companies such as AB InBev and Argenx incorporate share-based remuneration for board members. AB InBev’s director compensation structure includes a fixed cash fee alongside a share-based component, specifically in the form of Restricted Stock Units (RSUs). The RSUs granted to directors vest after a five-year period and, upon vesting, recipients are entitled to one AB InBev share per RSU. Similarly, at Argenx, the board of directors maintains a dual compensation structure, encompassing both cash-based and equity-based components.

Among the group of 50 companies that state they do not permit share-based remunerations, there is a divergence in the explanations provided. Some companies argue that the long-term alignment of NEDs is already assured; others believe that granting shares would compromise NED independence and long-term perspective. Additionally, some companies mention constraints such as the inability to purchase their own stocks for this purpose or that they do not have treasury stocks available.

Since share-based remuneration schemes continue to be fairly new in Belgium, companies are adapting in a variety of ways. It is apparent that the majority continue to delay any decision on the introduction of the share-based mechanism by at least one year.

Considering the nature of the activities and the composition of the shareholdings of the companies listed in Belgium, it is legitimate to ask if the obligation included in Principle 7.6 is indeed appropriate, and whether an option to provide shares would not be more suitable.