UK and Ireland AGM Season 2023: Proxy Voting and Trends

Average support for management proposals at FTSE 350 and ISEQ 20 companies decreased slightly from 97.4% in 2022 to 97.1% in 2023. While this represents a relatively marginal fall overall, it is largely attributable to lower levels of support for remuneration reports and share issuance proposals. It is also worth noting that the number of resolutions which received opposition from shareholders of 40% or more was higher in 2023 than in previous years (2023: 18 proposals; 2022: four; 2021: nine), including a record number of share issuance proposals (2023: 10; 2022: one; 2021: nil). These voting outcomes were however not reflective of new governance trends but rather of company-specific activism situations.

In spite of the wider range of issues that companies and boards are being held accountable for, perceived poor remuneration practices remain the main source of shareholder dissent. Average support on remuneration reports decreased from 93.1% in 2022 to 91.9% in 2023, while the proportion of companies receiving significant dissent (20% or more against votes) on their remuneration reports increased from 9.0% in 2022 to 10.3% in 2023. Among companies who experienced such opposition, a majority related to boards’ handling of executives’ long-term incentives. Specifically, investors raised concerns regarding increases in grant sizes, particularly in the context of the cost-of-living crisis, new performance criteria not deemed sufficiently stretching, windfall gains in relation to incentives granted during Covid-19, and upward discretion applied to incentives vesting in 2023.

Only 5.3% of FTSE 350 and ISEQ 20 companies up to the end of May experienced significant dissent on one or more director elections in 2023, compared to 8.8% in 2022. Directors’ time commitments continued to be a concern raised by investors. Individual directors were also held accountable for specific issues such as a lack of board diversity or perceived poor remuneration practices; however, the pressure exerted in 2022 appears to have spurred action at companies, with improved practice resulting in a drop off in significant opposition.

While fewer companies tabled say-on-climate proposals in 2023, we do not believe that companies are facing lower pressure to implement rigorous ESG strategies. Regulations and voluntary frameworks continue to evolve; and investors continue to look for adequate data to manage ESG risks or capitalise on emerging opportunities. They will continue to engage with companies to obtain data; and others continue to pressurise companies to implement (and demonstrate) stronger management and oversight of better ESG practices.