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European Commission recommendations

Besides directives and regulations the European Commission is also entitled, in accordance with Art. 211 EC, to lay down recommendations for member states. These recommendations are not binding (Art. 249 EC), but national courts have to take them into account when interpreting European law.

In the context of the Action Plan the Commission has so far laid down two recommendations. The first recommendation deals with the role of non-executive or supervisory directors. The second recommendation deals with the issue of directors’ remuneration. In response to the financial crisis, in April 2009 the Commission launched a number of initiatives in the area of remuneration policy, including a Communication (COM (2009) 211 final) and two complementary Recommendations. The first deals with the regime for the remuneration of directors of listed companies and complements Recommendations 2004/913/EC and 2005/162/EC. The second on remuneration policies in the financial services sector, focuses on addressing the perverse incentives and excessive risk-taking in firms active in this area.

Recommendation on the role of non-executive or supervisory directors

The Commission Recommendation on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board was formally adopted by the European Commission on 15 February 2005. The final version of the recommendation explicitly excludes board-level employee representatives from being classified as "threats" to board independence (see last page of recommendation, Annex II).

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Recommendation on fostering an appropriate regime for the remuneration of directors of listed companies

The European Commission Recommendation on fostering an appropriate regime for the remuneration of directors of listed companies was formally adopted by the Commission on 14 December 2004.

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Recommendation on the regime for the remuneration of directors of listed companies

The European Commission Recommendation of April 2009 on the remuneration of directors of listed companies complementing Recommendations 2004/913/EC and 2005/162/EC. The main objective of the Recommendation is to align executive remuneration with companies’ long-term interests.

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Recommendation on remuneration policies in the financial services sector

The European Commission Recommendation of April 2009 on remuneration policies in the financial services sector. This Recommendation addresses the perverse incentives and excessive risk-taking in firms active in this area. The Recommendation puts the EU in the vanguard in implementing the commitments made at the G20 Summit in London on 2 April 2009.

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