Shareholder dissent rife at UK listed companies

UK Shareholder dissent hits 10 year low

Shareholder dissent among investors in the top 350 UK companies stands at 2.95% on average for 2019, lower than 10 years ago, according to Minerva Analytics’ 2019 UK Voting Review.

The figure – which covers 1 January to 3 September 2019 – compares to an average of 2.91% for the whole of 2018, and 3.03% for 2017. It means that the overwhelming majority of shareholders (97%) voted with company management during this year’s AGM season.

Minerva Analytics counts both ‘against’ votes and abstentions in its calculation of dissenting votes, as many investors choose to abstain from supporting management as a first warning of dissatisfaction – in effect a ‘yellow card’, ahead of voting against at a later date if no action is taken.

This year, 68 of the top 350 companies recorded shareholder dissent of 20% or more relating to at least one proposal. In total, 126 resolutions received 20% or more votes against and abstentions. In 2018, 82 companies and 148 resolutions received high dissent levels, Minerva found.

High Dissent Count since the Remuneration Policy Vote was introduced

The 20% threshold, according to the UK Corporate Governance Code’s recommendations, should be considered as significant dissent, with boards required to report to shareholders any actions taken to address their concerns.

However, Minerva Analytics has questioned whether 20% is an appropriate level to judge shareholder discontent. Abstentions are often not taken into account when counting up votes, meaning any investors wishing to show a figurative ‘yellow card’ to a company’s board are not considered in the published results.

Minerva has argued that a 10% level of voter dissent should be seen as “representing something that boards and investors should look at closely”, as it could indicate unresolved differences of opinion on important policies that require attention. This level is used in countries such as France, although there are often restrictions on the type of shareholders that can qualify for this level.

The Investment Association, the trade body for the UK’s £7.7trn asset management industry, has been tracking shareholder dissent via its public register since 2017. The register lists any company resolution that has received 20% or more of votes against (abstentions are shown separately). It includes details of the resolution, voting results and links to subsequent board statements and actions.

However, with more than 200 companies now on the register, Minerva has questioned whether it is an effective tool to put pressure on company boards, and believes the register requires streamlining, with the focus on repeat offenders.

Of the 68 companies that recorded significant dissent in 2019, almost half were ‘repeat offenders’ that had also experienced high levels of voter dissent in 2018. In addition, of the 254 companies that received dissent of 20% or more on at least one resolution in the past six years, just over half also received high levels of dissent in at least one other year.

Three companies received significant dissent against at least one resolution in each of the last six years: Investec plc, Millennium & Copthorne Hotels plc and Telecom plus plc.

2019 Companies dissent - repeat offenders

These figures indicated a breakdown in engagement between companies and investors, and a failure by boards to effectively address shareholder concerns, according to Minerva.

“Either companies aren’t listening to feedback, or shareholders are not explaining effectively, or possibly a mixture of both,” the company said in its report.

Minerva also argued that the traditional six-week AGM season for companies with a 31 December reporting year end did not help shareholders or boards as it did not allow enough time to effectively engage and articulate concerns.

Across seven categories of resolution – audit, board, capital, corporate actions, remuneration, shareholder rights and sustainability – board and remuneration resolutions were the two largest sources of shareholder dissent. This year, 41.27% of resolutions that attracted high levels of dissent were related to board appointments, while 32.54% were related to remuneration reports or policies.

Despite the high level of dissent against board appointments, no appointment has actually been blocked by shareholders since 2017, according to Minerva. Centamin plc shareholders rejected the re-election of a non-executive over independence concerns at the 2017 AGM, although the board resolved to appoint the individual with some changes to their remit.

Each individual board member is subject to election and re-election at AGMs, meaning there is a high number of related resolutions as part of regular business at shareholder meetings. Last year the UK Corporate Governance Code was updated to remove an exemption for board of smaller companies, meaning there will be even more such resolutions next year.

Remuneration resolutions recorded an average of 7.43% dissenting votes in 2019, according to Minerva’s data. This is higher than 2018 (7.10%); it has remained above 7% since 2016. Strict rules around pay disclosure mean such issues often attract a great deal of media attention, which in turn can influence shareholder voting.

Minerva’s analysis showed that the mean level of dissent against remuneration policies was higher than the median, suggesting a small number of resolutions were particularly strongly opposed. This was also the case for remuneration reports.

However, there was a stark contrast between the number of remuneration policies that have been successfully voted down by shareholders and the number of remuneration reports that have been rejected, since disclosure rules were introduced through the Enterprise and Regulatory Reform Act 2013.

This disparity indicates a “pre-emptive oversight issue” regarding policy approval, Minerva said, as shareholders pass a pay policy only to reject the report when they see how the policy works in practice.

“This may be indicative that executive remuneration policies have become too complex, limiting investor ability to understand what the potential pay outcomes are,” Minerva said.

Minerva also said the remuneration and board dissent data raised questions about how seriously company management took issues such as the quality of board input and the approach and attitude towards pay.

“These questions are ongoing general concerns for shareholders which are as prevalent today as they were 10 years ago and continue to spark debate and regulatory initiatives,” the company said.

In contrast to these high levels of dissent, an average 1.12% of shareholders voted against or abstained on audit related resolutions, the lowest figure across the seven categories. This figure has fallen steadily since 2014, according Minerva’s data. Audit has hit the headlines of late following a series of corporate collapses including Carillion, Interserve, Patisserie Valerie and Thomas Cook.

There were 21 resolutions put forward by shareholders in 2019, including 13 at FirstGroup plc relating to the composition of the board. Two resolutions related to climate change. Reflecting the growing importance of climate change for investors, the sole successful shareholder proposal this year related to climate change disclosures – six of the 10 successful shareholder proposals in the last six years have related to climate change.  

In February, investor coalition Climate Action 100+ sought to introduce new reporting requirements for BP plc to detail how it was to align its strategy with the goals of the Paris Agreement on Climate Change. This resolution passed with more than 97% of votes after it received support from the board of BP. Dutch climate change campaign group Follow This’s resolution put to Royal Dutch Shell’s AGM in April was withdrawn shortly before the meeting following positive engagement between the two parties.

Minerva Briefing on 2019 Voting Review is available to download free. Get your own copy ! or email us at

Last Updated: 13 October 2019
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