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12 June 2018

As the AGM season picks up pace, there are two questions that will be keeping Boards, the Chairman, and the Company Secretary up at night: ‘Which resolutions could be rejected?’ ‘What questions will the Chairman be asked?’

In this new series, we aim to provide answers to both of these questions. Uniquely, we present current data on the questions being asked at AGMs across both the Main and AIM markets. How actively are shareholders using the opportunity to ask questions, and which topics are they raising? We categorise shareholder questions into 15 topics ranging from ‘traditional’ areas such as financial performance through to topical issues like Brexit and the gender pay gap.

In the second instalment of this series we look across both the shareholder questions, and resolution votes to the “hot topics” that are not so hot. Or are they?

Top question topics covered (includes only those AGM at which one or more questions were asked)

Pie chart 2b.png

Based on live data captured at 96 AGMs from 24 April - 31 May. 'Other’ includes all questions that do not fall in the other 15 categories.

Headlines

Corporate strategy and financial performance continue to be the focus for shareholders and represent over 40% of questions asked at the AGMs. Dividend policy and environmental concerns feature in the next largest group of questions. Environmental questions were raised exclusively in the meetings of FTSE 350 companies, as well as a few questions around the payment of the Living Wage to employees (these are included in the ‘Other’ category in the graph above). This is perhaps unsurprising and reflects these larger companies’ greater environmental footprint.

Media ‘hot topics’ low on the agenda

The predicted ‘hot topics’ for AGMs, which featured in voting agency previews of the AGM season, as well as in the media, have still not materialised as major areas for shareholder questions. Executive remuneration, board composition and diversity, gender pay gap and auditor re-appointment represent less than 10% of questions asked. Of course, companies understand the sensitivities around these topic areas and work hard to explain their approach in their corporate documentation and in presentations at AGMs.

“Despite a year of big news in both the corporate governance and political area, shareholders are laser-focussed on the core areas of performance and strategy, rather than topical issues like the gender pay gap or board composition. In these turbulent times, they have honed in on business’ bottom-lines and ability to adapt to changing market conditions”
Georgina Morgan, Client Services Director at Link Market Services

Voting tells a different story

However, looking at the voting results from our clients’ AGMs and information from the Investor Association Public Register* relating to these ’hot topics’ it is clear that shareholders are taking action in some areas:

  • Remuneration policy/report: many companies are continuing to engage actively with shareholders in connection with their remuneration proposals and we have seen less than 10% (16 out of 178) of remuneration report resolutions with a significant vote against (more than 20%). This trend is mirrored in the Investor Association Public Register, with 32 companies having received significant votes against their remuneration policies and/or reports.
  • Director re-elections: while these resolutions are generally supported (104 out of 1,244 director resolutions proposed by our clients received 100% votes), they are sometimes targeted if shareholders feel that the board’s approach to executive remuneration is wrong. On the Public Register so far 34 resolutions have had significant votes against and 8 director re-election resolutions have been withdrawn.
  • Auditor re-elections: on the whole auditors seem to be avoiding scrutiny. Of the 301 resolutions we have seen so far, only 3 have received significant votes against. This is symptomatic of the wider picture, as the Investor Association report that only 1 company has failed to pass this resolution.

About this study

Throughout the season, we will be updating this data, providing commentary from Link Asset Services’ experts in shareholder engagement and governance. As the UK and Ireland’s largest registrar, as well as one of the UK’s largest company secretarial teams, Link Asset Services provides expert guidance to companies through their corporate calendar and major shareholder events.

Link Asset Services’ clients who wish to find out more or discuss these results further should contact their Relationship Manager.

Methodology
Link Asset Services has captured data from clients’ AGMs attended by LAS employees, including listed companies for which it provides registrar services. This data is intended to present an overview of trends and does not provide a comprehensive picture of all UK and Irish AGMs and does not constitute investment or voting advice. All client data is confidential and is not being shared with any third parties.

*https://www.theinvestmentassociation.org/publicregister.html

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