Shareholder opposition at European AGMs fell in 2024, though remuneration reports still attract the most disapproval from investors.

Figures also show that votes against director reappointments have increased markedly in some European countries.

A report from Georgeson, the shareholder advisers, shows that pay reports accounted for 32.9% of all resolutions contested by 10% or more of shareholders votes, down on the 43.8% of 2023.

The research looked at voting patterns across eight European jurisdictions (UK, Netherlands, Germany, Spain, France, Switzerland, Italy and Belgium) and found year-on-year reductions in opposition in all four areas of shareholder voting.

Not only did dissent fall on remuneration reports but also remuneration policy (from 31.8% to 28.2%), share issuance (16.6% to 13.4%) and director elections (15.4% to 13.8%).

Domenic Brancati, global COO of Georgeson, says the trend appears to replicate events in the US and suggests that companies have prioritised shareholder engagement over the past year.

However, while overall opposition is down, the figures reveal European concern with executive pay remains higher than any other issue.

“The data also shows that, similar to last year, shareholders in European companies continue to oppose remuneration-related resolutions at higher rates than other resolution types,” Brancati says.

Executive pay in the UK

Falls in opposition to remuneration reports were particularly marked in the UK. Last year, 20.2% attracted dissenting votes of 10% or more. This year the figure plummeted to 7%, less than half the 2023 rate.

No other European jurisdiction saw such a fall. However, there has been a high-profile campaign in the UK by City figures, led by London Stock Exchange chief executive Julia Hoggett, to talk up the need for higher pay levels.

Directors were under less pressure in the UK too. Opposition to directors fell to a three-year low of 2.6%, down from 3.1% last year.

Elsewhere, the story was very different. Contested director elections rose in Germany, Netherlands and France. The Netherlands saw the most dramatic change, with last year’s 6.5% of contested elections doubling to 13.6%.

In a comment for the Georgeson report, Matteo Passero of UBS Asset Management warned that votes against directors could increase in the future.

“We see direct accountability as an emerging trend following the 2024 voting season. Asset owners and leading asset managers clearly expect board directors to be responsible for their companies’ efforts in tackling key environmental and social issues, and therefore are prepared to vote against these directors when expectations are not met.

“We believe this trend will intensify in the future, leading to votes against directors not only due to ‘traditional’ governance concerns, but increasingly for environmental and social issues as well.”

Voting in some jurisdictions followed the pattern of proxy adviser recommendations, in particular those of ISS. In the Netherlands, ISS negative voting recommendations rose from 0.9% of directors last year to 6.8% in 2024. In Germany, ISS increased negative voting on board members from 13.2% to an eyebrow-raising 23.2%.

Brancati makes his own warning that engagement can improve transparency between a board and investors. But failure to do so can have consequences.

“If a company’s leadership isn’t accessible in this way, investors may escalate their efforts, ultimately using their voting powers to express their disappointment publicly, especially if a company has had oversight issues in the past.

“In some cases where there is a disappointing vote outcome, shareholder engagement helps to display a company’s responsiveness to investor feedback. Each compnay engagement strategy should be tailored to incorporate the views of all shareholders to give the board the broadest view on their investor expectations.”