Compass Group AGM: 37% dissent on “overboard” NED
At FTSE 100-listed Compass Group’s 2018 AGM significant shareholder dissent of 37% was recorded on the re-election of non-executive Ireena Vittal. The dissent was due to ‘overboarding’ concerns, that is concerns that Vittal held too many other directorships such that she could not devote sufficient time to her duties on the board.
The UK Corporate Governance Code states that when 20% or more votes have been cast against the board recommendation for a resolution, the company should explain, when announcing voting results, what actions it intends to take to consult shareholders. An update on the views received from shareholders and actions taken should be published no later than six months after the meeting and a final summary provided in the annual report on what impact the feedback has had on board decisions.
Compass has not commented on the vote. The lack of comment is likely due to the company not counting abstentions in the votes cast as ‘for’ or ‘against’ the resolution, as permitted under UK Law. This meant that by the board’s count dissent on the resolution was below 20%. Although abstentions are not a vote in law, many investors abstain to indicate their lack of support for management and the GC100 and Investor Group’s guidance does suggest companies could consider viewing abstentions in combination with votes against as an indication of shareholder opposition that a company may wish to comment on and address.
At Compass’s 2017 AGM 40.27% dissent was recorded on Vittal’s re-election and Compass did comment at that time stating that Vittal would review her portfolio and seek to reduce her number of directorships. As a result, Vittal stepped down from one role at a private Indian company and stepped down from two further public Indian companies. However, the result in 2018 indicates this did not fully address shareholder concerns, for example, the voting guidelines issued by the Pension and Lifetime Savings Association, the UK pension fund trade body, recommends shareholders to vote against a non-executive director if they hold more than four directorships. In the annual report Compass report that Vittal holds five external appointments as such shareholders may retain their concerns.
Governance Issues at AGMs
