Despite it being only a couple of weeks since the December year-end FTSE100 companies’ AGM season finished (details on the results at that point were contained in our previous blog post), we have now begun the March year-end FTSE100 companies’ AGMs. Week one saw three FTSE100 companies hold their AGMs, with one of them resulting in our first “bloody nose” of 2014.
The three FTSE100 companies that held their AGMs last week, and the results, were:
Burberry – 47.3% for the implementation report and 83.9% for the policy report J Sainsbury – 99.5% for the implementation report and 99.2% for the policy report Marks & Spencer – 99.2% for the implementation report and 98.3% for the policy report
As can be seen from J Sainsbury and Marks & Spencer’s results, both received resounding “yes” votes. However, it was a different story for Burberry, which has become the first FTSE100 company to lose a remuneration vote in the current season. It’s worth noting that the binding vote, i.e. the vote on policy, was a healthy pass, with over 80% of shareholders backing the policy, but the headlines have been grabbed by the sub-50% vote for the implementation report.
A Burberry shareholder revolt had been long predicted in the press, with concerns as to the one-off award granted to Christopher Bailey when he became CEO, as well as “excessive awards” under incentive schemes, being cited as the likely reasons. As always, unless shareholders publicly disclose the reason for voting against, these reports should be taken with a pinch of salt. However, it’s clear that, with a vote against its implementation report of over 50%, it will be difficult for Burberry to suggest that the number is not significant (see our previous blog post for a brief discussion on that particular issue), meaning that Burberry’s next DRR will need to summarise the reasons for those votes (as far as they are known to the directors) and also set out any actions taken by the directors in response to those concerns.
In respect of the one-off award that Burberry made on appointment of its CEO, those types of payments will now be required to be approved in the recruitment section of the policy report, so shareholders will be given the chance to object to proposed payments at an earlier stage, and not via a retrospective non-binding vote as part of the implementation report. This area is a good example of where the new UK DRR regulations are leading to greater transparency, and may mean that shareholders no longer have to wait for the advisory, and with-hindsight, vote against those types of payments.
Elsewhere, the ABI merger with the IMA completed on 30 June (see our blog post) and last week Manifest, the proxy voting agency, released its annual survey on executive pay, which suggested that the “Shareholder Spring effect has reduced CEO pay awards by 7%”. The survey also concluded that the “regulatory intervention has had a galvanising effect” and has “helped in the reduction in CEO pay”. However, Manifest does not think the single figure is the correct way to measure directors’ pay, for reasons set out here.
Next week, there are eight FTSE100 companies’ AGMs – as always, our single source document will be updated to show all the results and will continue to contain links to all of the published DRRs.