Shareholder rebellion repeat offenders in spotlight

Three FTSE 100 heavyweights are among 32 companies to have received a letter from the Investment Association (IA) about potential governance failures, having appeared twice on the list of those who have experienced significant shareholder revolt on the same issue

Drug company AstraZeneca, construction giant Berkeley Group and advertising company WPP all feature on the public register held by the IA for the exact same resolution in 2017 and 2018, alongside 19 companies in the FTSE 250 and a further 10 from the small cap index.

The public register tracks significant shareholder dissent (of more than 20%) at AGMs and seeks for companies to respond to that dissent. It shows that an increasing number of companies are facing shareholder opposition, with rebellions up by just under a quarter in 2018. This year so far, 287 individual resolutions have been added to the public register, a jump of 22% from 2017.

The IA has now launched a new repeat offenders list as part of the public register, highlighting in one place those companies who experience year-on-year revolts for the same resolution.

Andrew Ninian, director of stewardship and corporate governance at the IA, said: ‘Appearing on the Public Register should act as a warning to companies that their shareholders are concerned about an aspect of the company’s governance.

‘While many companies are taking the necessary action and engaging with their shareholders, a frustrating number are failing to address investor concerns. We expect these companies to provide an update statement to their shareholders on the engagement they had since the AGM vote, the views heard from shareholders and the follow-on actions taken.

‘We hope that the increased focus on these repeat offenders will encourage them to engage with their shareholders and ensure their concerns are being addressed. The risk if they do not is greater investor concern in the future.’

A spokesperson for WPP which suffered a large vote against its remuneration report at its 2018 AGM said: ‘The reason for the significant vote against the report was primarily discontent around the non-disclosure of the details and outcome of an investigation into an allegation of personal misconduct by Sir Martin Sorrell, the terms of his 2008 employment agreement, his subsequent resignation in April 2018, his contractual treatment as a retiree and the “good leaver” treatment of his outstanding share awards.

‘The chairman and the company have engaged extensively with shareowners on the obligations of the Company and the historic and unique nature of the 2008 employment agreement, which have not been replicated in the employment terms of the new CEO of the company.

Berkeley Group, which faced a rebellion over the re-appointment of non-executive director Adrian Lee, said it had explained to investors that, because of different rules in Asia and the UK, Lee technically held too many directorships.

However, it added that he had proved himself over a number of years to be an ‘excellent’ and ‘committed’ member of the board.

AstraZeneca, which has faced shareholder rebellion over its pay plans for its top executives, has not commented.

Report by Pat Sweet

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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