The 2014 AGM season was dominated by a single hot topic: executive directors’ remuneration. This was in part thanks to the new reporting and voting regime which came into effect in October 2013 and meant that this year shareholders had a binding vote on remuneration policy as well as the advisory vote on the remuneration report.
Shareholders were keen to discuss remuneration policy in particular and this led to a number of listed companies releasing statements of clarification in this regard. In particular, the statements provided clarification about whether and in what circumstances awards could be made outside of policy limits.
In general, investors appeared to be disgruntled over the overall level of executive salary increases, and have shown that they want to see meaningful disclosure of bonus targets. With regard to the remuneration report, shareholders monitored closely the link between pay and performance and often raised questions about whether performance targets were sufficiently stretching.
However, despite all the media coverage and with the exception of a couple of high profile cases, the reality was that a majority of companies comfortably achieved over 90% support for both their remuneration report and policy. Whether we will eventually see a change in voting behaviour remains to be seen.
Gender diversity
Another notable area of interest over the season was gender diversity. Investors are increasingly taking notice of this element of board composition and directors have noted this in their boardroom succession planning. If shareholders have concerns over the lack of diversity on their board, they are not yet showing it in their voting behaviour. However, as the cause continues to be a popular topic of debate, particularly in the media, could we soon see shareholder activism increasing in this area too?
Valued opportunity for engagement
Members of the TMF Group company secretarial team helped to organise and subsequently attended a number of our clients’ AGMs this season. While most went off without a hitch, we also saw some heated and lively debates on a wide range of topics. AGMs can be a space for protest and airing concerns, but they also continue to be a meaningful and valued opportunity for companies to engage with their shareholders.