MINERVA 2021 H1 UK VOTING REVIEW – NOW AVAILABLE
June 5, 2021
Minerva has published its review of shareholder voting at the UK’s top 350 companies in the first half of the year. The analysis shows that average shareholder dissent in the first half of 2021 has continued the upward trend seen in recent years. Notably, more than half of the companies to receive high dissent in 2021 were repeat offenders. This high ratio suggests a breakdown in communication between companies and shareholders: either companies are not listening to feedback, or shareholders are not explaining effectively – or possibly a mixture of both.
Executive Remuneration continues to dominate dissent and the headlines
Executive pay continues to be a high-profile issue and remuneration-related resolutions prove to be the most consistently contentious resolution category of those routinely proposed by management. The dissent level on remuneration-related resolutions in 2021 currently stands at its highest level since binding remuneration policy votes were introduced in 2014.
Notably this year, remuneration-related resolutions have overtaken board-related resolutions for the highest count of high dissent resolutions. There were 60 high dissent remuneration-related resolutions and more than the 59 remuneration-related resolutions in the whole of 2020.
The primary drivers appear to be remuneration complexity, base pay increases larger than the wider workforce, and the continuing impact of COVID-19 concerning the use of discretion and/or adjustments. These trends suggest that remuneration continues to dominate the headlines and shareholder-board engagement. It appears that remuneration is being considered through an ESG lens, with a number of the highest dissent resolutions connected to ESG issues and questions over fairness and societal expectations on responsible business behaviour during the pandemic.
Defeated Resolutions – on the rise?
Within the review period, there were 21 resolutions proposed by management voted down by shareholders across 10 companies. This compares to the 23 defeated resolutions in the full 2020 calendar year. The data show that more resolutions have been voted down by shareholders in the first half of 2021 than in each of the full calendar years of 2014 to 2019. The results indicate that 2021 could be set to become the new record year for defeated management resolutions when all shareholder meetings have been held and voting results collected.
Shareholder Say on Climate
In the 2021 AGM season the momentum for a new type of resolution, the shareholder say on climate, has continued to build. In recent years, companies have come under increasing pressure to align their business models with the Paris Agreement Climate Goals, which call for global warming to be capped at 1.5°C compared with pre-industrial levels. The emergence of Say on Climate is a clear indication of the increasing relevance of this issue to investors and companies.
In 2021, four UK companies put forward a say on climate resolution for shareholder approval. The first set of say on climate resolutions passed with high levels of support, with Royal Dutch Shell receiving the highest level of dissent of the four companies at 16.85%.
Climate change also accounted for three of the four shareholder resolutions voted on this year at the UK’s top 350 companies. Unlike in the United States, where shareholder proposals on climate change saw a record number of successes, no shareholder proposal in the UK was successful.
Minerva is currently reviewing the issues raised by the Say on Climate initiative and will be publishing a briefing along with a good practice voting framework.
Key Numbers
Watch Sarah Wilson, CEO, and Fran Lopez, Stewardship Director, discuss the early findings from this report on our BrightTALK channel:
