Settling up

Shock news from AGM season: while a debate rages over higher executive pay, shareholders seem to be shedding their opposition to remuneration policies.

Word reaches Board Agenda from Georgeson, the shareholder consultants, that in Q1 none of the 34 FTSE 350 outfits with votes on remuneration reports have faced significant opposition, defined as 20% or more.

Georgeson points out that, given the debate about pay, the votes so far may well indicate a “softening” of views on remuneration and a “willingness” to see pay in the context of global pay standards.

It’s worth recognising, though, that this is still early in AGM season and data so far represents only 10% of FTSE 350 firms. Pay has regained its place as high-profile business news after London Stock Exchange CEO Julia Hoggett wrote a blog talking up the need for bigger pay packets.

This week, her boss, David Schwimmer, received backing from shareholders (89%) for a proposal that would see his pay from around £6m to £13m.

It is worth noting that though remuneration policies seem to have a clean slate, Q2 already includes a couple of marks, including votes of 24% against the remuneration report of Hunting PLC, the energy equipment company (17 April), and a 35% vote against AstraZeneca’s remuneration policy.

There’s still a way to go before we can draw full conclusions about the popularity of higher CEO pay rates with investors. It’s going to be a nail biter.

Doubling down

Big news from Brussels: the European Parliament has voted for the Corporate Sustainability Due Diligence Directive (CSDDD), the big piece of new lawmaking that asks companies to report on environmental and human rights abuses in their supply chains.

It had been a bit touch and go at one point last month, when German politicians decided it was a big unfair on some companies, but compromises have been reached.
Add CSDDD to the EU’s Corporate Sustainability Reporting Directive—and that’s reporting double materiality, by the way—and you have a formidable set of rules now in play aimed at changing corporate behaviours.

Let’s hope it works.

From side to side

A warning: the latest trend is for former directors to turn activist against their former companies.

Will Arnot, an activism expert with Diligent Market Intelligence, points out that recent activism against Disney, the entertainment giant, involved its former finance chief, Jay Rasulo.

In Europe, the number of “insider campaigns” has doubled from three to six in the year to 2023.

A classic example is François Fornieri, founder of Belgian women’s health company Mithra Pharmaceuticals, who stepped away from the firm in June 2022, only to return in October 2023 as part of a group of “concerned shareholders”.

Arnot cites Lauren Gojkovich, founder of LDG Advisory, who said: “In a contested situation when both sides are trying to make their case for change resonate across the rest of the shareholder base, introducing that extra dynamic of pre-existing history and attendant emotion can make the already-challenging decision-making process for the rest of the shareholder base more complicated.”

Not kidding. Beware those boomerang directors.