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FTSE100 pay and director re-election spark renewed shareholder rebellion at 2018 AGM season

New analysis of voting trends during the 2018 AGM season published today shows that shareholder rebellions rose by over a quarter in 2018, landing 120 companies on the Investment Association’s Public Register of shareholder votes.

The new data compiled by the Investment Association, the trade body that represents the UK’s asset management industry, shows that 120 FTSE All-Share companies were added to the Public Register, which tracks significant shareholder dissent (over 20%), up to the end of July 2018, compared to 110 companies over the same period in 2017. In total, 237 individual resolutions were added to the Public Register in 2018, a jump of 25% from 2017. Significantly, in 2018, 29 repeat offenders appeared on the Public Register for the exact same resolution as last year (35 resolutions in total).

Opposition to individual director re-election was also a key theme this year, with the number of total resolutions more than doubling from 38 in 2017 to 80 in 2018. The rise was particularly stark in the FTSE 250, where rebellions more than doubled (106%) with 37 resolutions in 2018 compared to just 18 in 2017.

While executive pay declined overall as an issue in the FTSE All-Share, with the total number of remuneration resolutions dropping from 68 in 2017 to 61 in 2018, there was a sharp rise in objections to FTSE 100 pay this year. This year 18 pay resolutions attracted over 20% shareholder dissent among FTSE 100 companies, double the number (9) in 2017. This resulted in the near doubling of FTSE 100 companies on the Public Register because of pay, up from 8 in 2017 to 15 in 2018 (88%).

Chris Cummings, Chief Executive of the Investment Association, said:

“Shareholders have shown their teeth this year over FTSE 250 director re-election. They are using their votes to hold individual directors to account for decisions they made on issues such as executive pay and board diversity, as well as concerns that individual directors do not have the bandwidth to fulfill their roles as they spread themselves too thinly on too many boards.

“While executive pay declined overall as an issue, there was a deeply disappointing jump in the number of FTSE 100 companies that saw pay rebellions in 2018. Shareholders clearly remain unimpressed with the approach to pay last year, and are frustrated the message is not getting through to some boardrooms. FTSE 100 companies must do more to ensure the pay packets of their top team align with company performance and remain at levels that shareholders find acceptable.

“Now in its second year, the IA’s Public Register is already driving change and accountability. Nearly two thirds (65%) of companies on the register in 2018 made a public statement at the time of their AGM, acknowledging the significant shareholder dissent and outlining how they plan to engage with shareholders, compared to only half (51%) last year. Shareholders now need to see companies acting on their pledges to deal with investor concerns or risk facing another backlash next year.”

Business Minister Kelly Tolhurst MP, said:

“Shareholder revolts on executive pay fell this year but it is right that shareholders are able to send a strong signal when they aren’t satisfied that executive pay is in line with performance.

“This register is one of a package of reforms by the government to upgrade our corporate governance, including board diversity and CEO pay ratio reporting, to make our largest companies more transparent and accountable to their staff and shareholders. We will continue to work with business to ensure the UK remains the best place in the world to work, invest and do business”

Among the 46 companies added to the Public Register in 2018 for director re-election, nearly half (43%) saw their Chair face a rebellion of greater than 20%, pointing to a growing disquiet over individual accountability for the decisions made.


Notes to Editors:

For media enquiries:

Andrew Ninian, Director of Stewardship and Corporate Governance at the Investment Association, is available for interview. To arrange interviews, please contact the IA press office using the details below.

Anisha Patel, Head of Communications: anisha.patel@theia.org
T +44 (0)20 7269 4635
Ben Rathe, Senior Communications Manager: ben.rathe@theia.org
T +44 20 7269 4655

About the Public Register:

• The 2018 figures are based on AGM and GM meetings from 1 January 2018 to 31 July 2018. All comparisons with 2017 are using the same date range.
• The full Public Register is available here: https://www.theinvestmentassociation.org/publicreg...
• The methodology can be found here: https://www.theinvestmentassociation.org/publicreg...
• In the Government’s response to the consultation on corporate governance reform, in August 2017, the IA was asked to establish and maintain a Public Register of FTSE All-Share companies which have received more than 20% votes against any resolution, at an AGM or GM. The Public Register will also include any resolutions which were withdrawn by a company prior to the meeting. The main aim of the Public Register is to focus attention on those companies which have received a significant vote against, and to track whether and how they are responding to shareholder concerns. A link to the companies’ response is included alongside their voting data as part of the Public Register.
• The Public Register includes all resolutions which have been withdrawn. Companies may withdraw a resolution for a variety of reasons including to stem shareholder concern, to more practical circumstances such as the retirement of an executive director.
• The Public Register will be updated on an ongoing basis throughout the year. It will include a description of the resolution, the result of the shareholder vote, a link to the AGM results announcement (including any statement the company has made under E.2.2 of the UK Corporate Governance Code and a link to any further statement the company has made on the actions they have taken since the vote.

About the Investment Association:

• The IA champions UK asset management, supporting British savers, investors and businesses. Our 240 members manage £6.9 trillion of assets and employ 93,500 people across the UK.
• Our mission is to make investment better. Better for clients, so they achieve their financial goals. Better for companies, so they get the capital they need to grow. And better for
the economy, so everyone prospers.
• Our purpose is to ensure investment managers are in the best possible position to:
• Build people’s resilience to financial adversity
• Help people achieve their financial aspirations
• Enable people to maintain a decent standard of living as they grow older
• Contribute to economic growth through the efficient allocation of capital.
• The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.
• The UK is the second largest investment management centre in the world, after the US and manages 37% of all assets managed in Europe.