Pensions Investment Research Consultants (“PIRC”), the shareholder advisory body, has published the 23rd edition of its UK Shareholder Voting Guidelines. These guidelines replace the version published in April 2015.

The new 2016 guidelines make clear that:

  • PIRC will not support authorities for the disapplication of pre-emption rights up to an amount equal to 10% of the company’s issued ordinary share capital unless the board has made a clear, cogent and compelling case as to why the 10% level is appropriate for the company;
  • PIRC will only support future requests for share buyback authorities if the board has made out a clear, cogent and compelling case to demonstrate how the authority would be used to benefit the long-term shareholders and that the directors are not conflicted in recommending the authority;
  • in relation to the provision of non-audit services by audit firms, PIRC will normally recommend abstaining where non-audit fees are between 25% and 50% of audit fees and opposing where non-audit fees exceed 50% of audit fees for either year under review or the previous three years;
  • PIRC supports the efforts of Lord Davies to increase board diversity and therefore, in line with the updated Davies target, has updated the target in its Guidelines to 33% female board representation by 2020; and
  • PIRC continues to oppose excessive remuneration and has added some new criticism of “absurd” retention awards made where there is no indication that a director wishes to move on or that there is outside demand for the director’s services. The new Guidelines are also now more prescriptive about who should be allowed to sit on the remuneration committee. PIRC states that remuneration committee members should not be executive directors of other UK listed companies and that, in 2016, PIRC will abstain on the election of any such directors who sit on the remuneration committee.

The PIRC UK Shareholder Voting Guidelines 2016 are available to purchase from PIRC and can be accessed here: