Across Europe, remuneration was the issue most likely to be contested during AGMs, according to new research.

Consultancy Georgeson says that, of all the AGMs that saw shareholder opposition of more than 10% in seven European markets (including the UK), more than a third (36.1%) of them were over pay. It is down on last year’s 37.1%, but remains the topic that attracts most shareholder dissent.

However, the UK has the lowest proportion of contested remuneration reports at 20%, far behind Switzerland, where seven out of 10 reports saw hefty revolts from shareholders.

When it comes to remuneration “policy”, though, it is companies in Italy, France and Spain where there is most opposition, with almost half the listed businesses in each market being contested.

Meanwhile, the number of director elections facing opposition has risen to 11.7%. The UK saw only 3.2% attracting opposition (down from 4.5% last year), while for Germany this was 18.7%.

‘Misalignment’

Domenic Brancati, global chief operations officer with Georgeson, said: “Although the numbers show that shareholders in European companies continue to perceive a misalignment between compensation and shareholders’ interest, they seem to be taking issue with the way policies are implemented, not how they are structured.

“Director elections also remain in focus, as shareholders continue to use their votes to express dissatisfaction about specific matters such as board diversity and climate change.

“Our work elsewhere in the world tells us that the increase in the portion of disputed director election resolutions is a global trend and underlines the need for companies and boards to actively engage with their shareholders.”

The Georgeson report is based on research looking at AGMs in seven countries—the UK, France, Germany, the Netherlands, Spain, Italy and Switzerland.

Say-on-climate

This was the third year of companies voluntarily putting forward “say-on-climate” proposals, allowing shareholders to vote on their climate transition plans. However, the number emerging has fallen with 24 this year across the seven states, compared with 36 last year.

Average support for a climate vote was 91%. However, the lowest support was 53.1%, for Credit Suisse—the lowest since climate votes first began, and well below the lowest last year of 88.7%.

James Upton, senior corporate governance specialist for Pictet Asset Management, links pay and ESG in comments for Georgeson.

“We continue to pay close attention to the relevance of executive remuneration targets, particularly where they relate to ESG factors.

“Many companies are keen to include an ESG related pay element, but often without choosing targets that are meaningfully aligned to the firm’s risk profile or with the needs of its shareholders.”

Another asset manager, Michiel van Esch of Robeco, noted the appearance of anti-ESG resolutions marked by an opposition to diversity and inclusion or social benefit policies.

“These resolutions,” he says, “added to a more politicised and polarised AGM season this year.”

Jocelyn Brown, head of governance EMEA for T. Rowe Price, notes there was much concern about the rise of virtual AGMs. But she had a warning, saying “based on our long experience investing in the US where virtual AGMs are more established as a practice, it is clear that—although rare—company abuse of the AGM can take place whether the meeting takes place physically, virtually or in a hybrid format.

“Hence we are generally open to a company wanting to run their AGMs virtually, unless there is evidence of prior behaviour against shareholders’ interests.”