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Pensions & Investment Research Consultants Ltd (PIRC) UK Shareowner Voting Guidelines 2017

PIRC has published the 2017 edition of its UK Shareowner Voting Guidelines, replacing last year’s version.  Additions to the guidelines include the following:

  • PIRC will oppose the re-election of an executive chairman except in exceptional circumstances.

  • PIRC supports the Hampton-Alexander Review and the Davies Review recommendation that 33% of board positions in FTSE 350 companies be held by women by 2020.

  • PIRC will not support the re-election of a nomination committee of a FTSE 350 company where current female representation on its board falls below the expectation above and the company has no clear and credible proposals to achieve that objective.

  • Boards and shareholders should consider a director’s track record, qualifications, sector based experience, transactional experience and overall competency when considering their suitability for election (previously, this was a requirement on re-election only).

  • It should be normal practice to advertise formally vacant executive director posts.

  • Where a company receives a significant proportion of votes cast against a management proposed resolution it should (in addition to a statement within its RNS announcement) disclose in its subsequent annual report the steps taken to engage with shareowners on their substantive concerns.

  • PIRC views the BEIS Green Paper on corporate governance reform as consistent with its interpretation of the law regarding directors’ duties and strategic reporting (i.e greater emphasis on directors explaining how they have fulfilled their duties under the Companies Act 2006, including the non-exhaustive items specified in section 172).

  • Companies should, on an annual basis, disclose the remuneration consultants used and the amount of their fees.

Business people discussing strategy in boardroomThe following items have not been included in the new guidelines:

  • The secretary should not also be a director.

  • The role and responsibilities of the secretary should be set out formally in a contract and outlined in the annual report.

  • PIRC’s view that the appointment of alternate directors is not acceptable due to the lack of accountability to shareholders.

The guidelines are available to purchase through the PIRC website.

© Copyright 2017 Squire Patton Boggs (US) LLP

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About this Author

Edward J. Dawes, Squire Patton, UK Equity lawyer, corporate acquisitions disposals attorney
Partner

Edward Dawes is a partner in the Corporate Group in Birmingham. Described in the 2015 edition of the Legal 500 “exceptionally bright, very responsive, and practical”, Ed has more than 25 years of experience helping companies to plan and execute corporate transactions with particular focus on advising on corporate acquisitions and disposals, recommended and hostile takeovers, UK equity market fundraisings and regulatory compliance.

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