1.  What are the main regulations in your jurisdiction governing ESG criteria/obligations in executive remuneration?
  2.  What sectors/industries do these regulations cover?
  3. Which ESG-relevant pillars are covered by these regulations?
  4. What are the obligations for companies/directors/top management covered by these regulations?
  5. Is there a distinction between directors and top management employees in terms of ESG requirements?
  6. What are ESG-relevant requirements governing ESG obligations for non-executive employees’ remuneration? 
  7. What are ESG-relevant requirements in terms of addressing the gap between executive and workforce remuneration and/or executive gender pay gap?
  8. Please describe the main features of the prescribed remuneration schemes (deferred payouts, timelines, thresholds, ceilings etc.)
  9. Are there rules or official guidelines regarding ESG performance measures and targets (KPIs) for directors'/top management's remuneration?
  10. What are the market practices regarding ESG criteria for executive remuneration?
  11. Did the market practices derive from self-regulation? For example: soft law or voluntary adoption standards issued by shareholder or governance associations, white books or GRI standards, etc.
  12. Are there different practices in different sectors and industries? For example: banking, energy, telecoms, insurance, listed companies, etc.
  13. What are the most common ESG KPIs you observe used by companies when defining ESG KPIs?
  14. Are the ESG KPIs included in the short-term remuneration, long-term remuneration or both?
  15. How large is the share of ESG-related variable remuneration in the variable remuneration as a whole?
  16. What are the ESG-related disclosure requirements, including reports to the regulator, in annual reports, etc.?
  17. What is the effect of these regulations on existing agreements? Do they overrule employment/civil law agreements when entering in force? How is this conflict solved in your jurisdiction?
  18. Is there a regulatory body in your jurisdiction overseeing ESG matters? If so, what measures can be taken by the authority?
  19. Are there prospects of any future regulations being adopted in your jurisdiction in this regard? For example: soft law regulations, private self-regulation initiatives, informal discussions on the transposition of EU Corporate Sustainability Reporting Directive, etc.

Jurisdiction

Serbia
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1. What are the main regulations in your jurisdiction governing ESG criteria/obligations in executive remuneration?

In Serbia, there are no regulations that specifically focus on ESG criteria/obligations in executive remuneration. The Serbian Companies Act only sets forth the general legal framework related to executive remuneration in public joint-stock companies and provides that remuneration may be tied to sustainability goals.

2. What sectors/industries do these regulations cover?

The Companies Act covers public joint-stock companies in all sectors/industries.

3. Which ESG-relevant pillars are covered by these regulations?

Not applicable.

4. What are the obligations for companies/directors/top management covered by these regulations?

Article 463a of the Companies Act provides that a public joint-stock company must have a remuneration policy for directors and members of the supervisory board if the company has a two-tier management, and that this policy should determine the extent to which remuneration contributes to the company's business strategy, long-term development and sustainability.

5. Is there a distinction between directors and top management employees in terms of ESG requirements?

Not applicable

6. What are ESG-relevant requirements governing ESG obligations for non-executive employees’ remuneration? 

There are no such requirements.

7. What are ESG-relevant requirements in terms of addressing the gap between executive and workforce remuneration and/or executive gender pay gap?

There are currently no specific ESG-relevant requirements when it comes to pay gap. There are only general rules prohibiting unequal pay for the same work or work of the same value.

8. Please describe the main features of the prescribed remuneration schemes (deferred payouts, timelines, thresholds, ceilings etc.)

Not applicable

9. Are there rules or official guidelines regarding ESG performance measures and targets (KPIs) for directors'/top management's remuneration?

In 2012, the Chamber of Commerce and Industry of the Republic of Serbia adopted the Code of Corporate Governance, which establishes certain principles for good corporate governance. The Code of Corporate Governance recommends that variable remuneration should depend on the fulfilment of financial and non-financial performance criteria. The list of suggested non-financial performance criteria includes individual performance, consumer satisfaction, introduction of an environmental protection system, etc., particularly if they are aimed at generating long-term value for the company.

10. What are the market practices regarding ESG criteria for executive remuneration?

Due to fact that there are no local regulations and requirements in this respect, we have mainly observed only CSR and corporate governance-related criteria when it comes to executive remuneration, primarily in the financial sector.

11. Did the market practices derive from self-regulation? For example: soft law or voluntary adoption standards issued by shareholder or governance associations, white books or GRI standards, etc.

See answer no. 9. In most cases, such practices also result from the implementation of standards applied within the same international group of companies. 

12. Are there different practices in different sectors and industries? For example: banking, energy, telecoms, insurance, listed companies, etc.

In most cases we observed across various sectors, the main criteria related to CSR and corporate governance only.

13. What are the most common ESG KPIs you observe used by companies when defining ESG KPIs?

Successful development and operation of a CSR management system; compliance awareness and prudent operation.

14. Are the ESG KPIs included in the short-term remuneration, long-term remuneration or both?

Both.

Up to 10%.

There are no such requirements.

17. What is the effect of these regulations on existing agreements? Do they overrule employment/civil law agreements when entering in force? How is this conflict solved in your jurisdiction?

Not applicable.

18. Is there a regulatory body in your jurisdiction overseeing ESG matters? If so, what measures can be taken by the authority?

There are no regulatory bodies specifically overseeing ESG matters.

19. Are there prospects of any future regulations being adopted in your jurisdiction in this regard? For example: soft law regulations, private self-regulation initiatives, informal discussions on the transposition of EU Corporate Sustainability Reporting Directive, etc.

We are not aware of any upcoming regulations. However, there might be some private self-regulation initiatives, considering that the German Supply Chain Due Diligence Act will indirectly affect many companies in Serbia that are suppliers of large German companies. If those companies fail to meet the ESG requirements, they will face the risk of losing their German clients. At the same time, complying with complex ESG requirements presents an opportunity for companies that are struggling to become more attractive as suppliers to German clients or clients from other EU countries.