FTSE100 AGMs and DRRs – the AGM season so far… re: UK Executive Remuneration
Over 70 FTSE100 companies have now released their DRRs and we are well into the 2015 AGM season. So far, most FTSE100 companies are coming through the AGM season unscathed.
In respect of the implementation report (this is the aspect of the directors’ remuneration report that describes how the remuneration committee implemented the company’s approved remuneration policy), over 80% of the FTSE100 companies that have held their AGMs so far received strong support (with votes of over 90% approval) for the remuneration committee’s implementation of the approved pay policy.
All looking positive so far, but what about the 20% of FTSE100 companies which have not fared so well in the implementation report stakes? Well, no FTSE100 company has dropped under the 50% threshold (which would mean putting the remuneration policy up for a vote next year). Most of the remaining 20% received votes of over 80% in favour, but there have been a few casualties over the past few weeks. Most notable was Centrica, where just over a third of shareholders voted against the remuneration report. Centrica has been relatively quiet in the world of executive remuneration in the last two years. It has previously received votes in favour of 98.3% and 93.2%. However, this year many shareholders were unhappy with the pay package of the new CEO, Iain Conn and made their displeasure heard.
HSBC also struggled and nearly 24% of its shareholders voted against its implementation report, an increase from 16% against last year. One can’t help but think that shareholders were reflecting some disappointment in the current executives not having their remuneration more severely affected by the problems in Switzerland even though the current team were not “in-post” when those problems arose. Perhaps the only way to have appeased shareholders while still paying the current executive for recent performance would have been to implement clawback rights against the executives who were in post when the Swiss operation was purchased some years ago. At least then shareholders would have seen sanctions for those costly actions being taken against someone and may have been less concerned about visiting the sins of the father on the current executive (so to speak). If only clawback rights had been implemented 10 years earlier…
BG also faced a pay revolt. Some would say this is unsurprising given the controversy Helge Lund’s pay attracted last year. 17.9% of shareholders voted against the remuneration report. It is thought that the reason for the negative votes is due to the new CEO’s pay. At least if the proposed sale to Royal Dutch Shell goes through BG’s remuneration committee won’t have to worry about the prospect of even more fierce opposition next year, by which time it appears that Mr Lund may have done rather well as BG’s CEO over a short space of time.
And what of those companies that have put their remuneration policy to shareholders? Readers may recall that companies are only obliged to put their policy before shareholders every three years. Nonetheless, quite a few companies have put the policy back before shareholders only a year after getting it approved. In fact, of the FTSE100 companies that have put their remuneration policy back in front of shareholders, not one has received less than 90% support.
By way of follow up on our recent blog posts (and not wanting to ignore the recent unexpected election result) Labour and the Liberal Democrats were both proposing employee representation on the remuneration committee. This would have represented a significant change to the current system and remuneration committees and possibly those poor employees who might have found themselves arguing against the CEO’s pay(!) may be pleased this does not look like a likely option with a Conservative government.
To keep up to date with all the FTSE100’s AGM results please see our single source document, which also has links to the DRRs and last year’s results.