2020 saw a significant uptick in shareholder scrutiny during proxy season, with multiple headlines of voting against remuneration, board appointments, ESG, etc, across Europe as investors continue to take their stewardship role and ESG seriously. The headlines are clear:
“BlackRock votes down record number of board directors”
“British Airways owner suffers big shareholder revolt over pay”
“APG turns against excessive pay”
“Total sees significant shareholder revolt over climate ambitions at AGM”
“Hedge fund TCI vows to punish directors over climate change”
“Investors pile pressure on companies over ESG at annual meetings”
ESG activism has arrived, a quick look at 2020:
TCI/AENA, is a current Spanish example focused on Climate Change. BlackRock disclosed that in the past year it voted 55 times against directors at 49 companies for failing to make progress on tackling climate change
In September dual-listed Rio Tinto lost its CEO as Jean-Sébastien Jacques stepped down to avoid a shareholder revolt at the AGM, linked to Aboriginal land issues.
In June Tesco suffered a shareholder rebellion as 67% rejected their Remuneration Report, despite strong trading results.
And don’t forget shareholders’ traditional Value expectations.
Remuneration has been a key AGM topic for the last decade and this will be more heated as boards protect their balance sheets by restricting dividends, raising equity, cutting staff or receiving government funding. Investors will continue to highlight any agency issues between management remuneration and investor returns as we prepare for 2021.
In Europe, SRD II now gives shareholders an annual vote on remuneration, similar to the UK model. Markets like the Netherlands had some messy moments in 2020 while Germany delayed implementation until the 2021 AGM season. Learn from Tesco’s experience.
Ask yourself four key questions for the 2021 AGM season:-
1. Do you know the various Proxy Advisors updated voting policies for 2021?
2. Do you really know who your shareholders are, how they vote and how they want to engage with their investments?
3. Have you written the resolutions focused on legality of input or success of outcome?
4. Can I add Proxy Solicitation support from Investor Update?
Proxy Solicitation – new highly experienced Service for 2021
Investor Update have added a new IR service for the 2021 Proxy Season. We have built a Proxy Solicitation team around Tony Quinn, Andrew Stevenson and Martyn Smith. Between them they bring over 70 years’ experience across $ trillions of successful global M&A transactions and hundreds of company meetings.