Non-Executive Director re-elections, remuneration and Climate-resolutions – Georgeson’s review of the 2022 AGM season

The review examined the resolutions proposed at the AGMs of listed companies in the UK, the Netherlands, Germany, Spain, France, Switzerland and Italy. Dissent against director re-elections decreased year-on-year, and whilst remuneration will continue to be a lightning-rod issue, a key focus for Boards is the rise of Climate- related resolutions with 36 in 2022 compared to 12 the year before. As exposed in Georgeson’s review, shareholder support for climate-related resolutions received less support in 2022 with 91% aggregated support, vs. 97% the year before.

‍

Highlights from the UK chapter

·        The UK had the lowest shareholder dissent on contested director elections (10%+ opposition)  across the 7 markets observed. The share of contested votes in the FTSE 100 fell from 4.9% in 2021 to 4.5% in 2022.

·        Proxy advisors ISS and Glass Lewis issued negative recommendations on0.7% and 1.3% of director election votes in 2022, respectively.

·        Proxy advisors continue to have a big impact on the outcome of proposals, and there is a clear correlation between negative proxy advisor recommendations and lower vote results. For instance, in the FTSE 100, the six remuneration reports with the lowest level of support all received negative recommendations from both ISS and Glass Lewis.

·        The number of FTSE 100 companies that had at least one contested proposal was 57. The overall number of contested resolutions increased from 121in 2021 to 125 in 2022. As the total number of resolutions put forward by FTSE100 companies decreased over the same period, the percentage of resolutions that were contested increased from 5.51% last year to 5.78%.

·        Though the UK has the lowest share of remuneration report votes that received 10% or more opposition votes across the 7 markets, the percentage of contested remuneration report votes increased from 16.2% in 2021 to 19.2% in 2022.

·        The share of contested remuneration policy votes increased consistently since 2020. 19.2% of remuneration policy votes received 10% or more opposition in 2022, compared to 16.2% in 2021and 12.1% in 2020.

Highlights from the rest of the report

Three-quarters of the Say on Climate proposals originated in the UK (16) or France (11).

Georgeson also found that the proportion of contested resolutions related to executive remuneration policy and reporting declined by 4.2% from 38.8% to 37.1% across the seven markets.

Domenic Brancati, Global Chief Operating Officer at Georgeson, said: “Shareholders across the continent are increasingly using their votes to express their dissatisfaction on remuneration, director elections and sustainability.

“The decline of shareholder support on Say on Climate suggests that investors seek more meaningful disclosure, better answers and improved alignment from companies on key environmental, social and governance (ESG) issues.

“European investors’ increased focus on these areas is part of a global change that has been influenced by several key events, including a prolonged pandemic, the conflict in Ukraine and increased economic uncertainty, all of which may point to increased vulnerabilities for some companies.

“As a result, many investors are working to protect and preserve the value of their portfolio by taking measured steps, such as opposing share issuance resolutions to guard against share dilution and reduce the chances of a takeover.”

Click here to download Georgeson’s 2022 AGM Season Review

‍