PLSA AGM review 2017

Examining the Annual General Meeting (AGM) results and causes of shareholder dissent for FTSE 350 companies during 2017.

Shareholder votes at AGMs are of particular interest to UK pension funds – responsible for investing £2.2 trillion on behalf of over 20 million savers in the UK– because they provide a useful indication of the strategy, governance and culture of these companies.

Overall the AGM Voting Review shows relatively steady levels of shareholder dissent at company AGMs for the past two years, with roughly one fifth of companies (FTSE 250: 56 and FTSE 100: 17) experiencing significant dissent (of at least 20% of AGM votes) over at least one resolution at their AGM. Over the longer term, the report reveals a fall in shareholder dissent since its peak in the aftermath of the financial crisis and the subsequent focus on governance that this entailed.

Executive pay awards continue to be the most controversial aspect of corporate governance, with the figures of significant remuneration-related dissent at FTSE 350 AGMs from 2015-2017 consistent with previous years.

The report also illustrates some progress in holding board members to account for flawed executive pay practices at FTSE-100 companies. In 2016, average dissent levels over remuneration policies were four times higher than dissent over the re-election of remuneration committee chairs as directors. In 2017 they were less than twice as high, suggesting that most shareholders are now voting against the remuneration committee chair if they vote against the remuneration policy.

It’s encouraging to see these recommendations are having a positive effect, particularly alongside the fall in executive pay levels recorded last year, but there is still considerable room for shareholder scrutiny of pay practices to improve. We hope to see these emerging trends continue.