2019 AGM Season Trends

Article by Boudicca

As the peak of 2019 AGM season eases off, we get the opportunity to take stock of what happened in the proxy voting arena and consider how our predictions and expectations played out.

In our 2019 Season Forecast, we anticipated a general toughening up of investor policies, with Boards being made to feel more accountable for the decisions they have made and the practices they have applied. This did indeed materialise, and we have witnessed an upturn in dissent expressed against individual directors held accountable for upholding disagreeable practices; or for a lack of responsiveness to the concerns of investors and Proxy Advisers.


Of course, the usual suspects have come under fire, including remuneration and share issuance proposals; but we have perceived a notable link back to the policy-owners when issues of diversity, succession planning and remuneration excess – especially in the context of a company’s share performance – have come into focus. Boudicca has also been involved at the hotter end of several proxy contests already this year, which has illustrated to us how activism (Barclays, Gulf Marine Services, SuperDry) and constructivism (e.g. LetterOne/DIA) have only gained momentum.

The drivers for greater and more targeted dissent have included stricter investors’ voting policies, changes to regulatory and advisory frameworks such as the UK Corporate Governance Code, the Investment Association’s Remuneration Principles, the Stewardship Code and the QCA guidelines, and the influence of proxy advisers such as ISS, Glass Lewis, IVIS and PIRC.

In H1 2019, Boudicca has provided proxy and corporate governance advisory programmes for around 80 clients, largely UK-based. This experience, coupled with insights from our sister company, Prism Cosec, and our collective parent’s issuer, Equiniti, gives us a good foundation for assessing the season’s trends and drivers.

On review, Boudicca believes that the AGM trends of 2019 fall into three key areas:

• Board Accountability

• Shareholder Activism

• Socio-Political Concerns

We explore the trends under each of these headings, looking primarily at Director Re-elections, Director Remuneration, Auditor Issues, Equity Issuance. Taking this further, we consider other areas that have given rise to questions and requests for clarifications from clients: Employee Board Representation, Committee Membership, The Public Register and Shareholder activism.

Boudicca is aware that voting behaviour can differ depending on the size of the UK issuer concerned. To that end, we have analysed voting outcomes based on market capitalisation, split between the FTSE 350 and the AIM All Share indices.

We would assert that the combination of higher benchmarks for UK corporate governance, the requirement of issuers to explain shareholder dissent in public, the cost and time pressures on investment management, and the consequent prevalence and influence of Proxy Advisers shows that UK issuers can no longer rely on the ‘law of averages’ in terms of shareholder
support. Companies must continue to actively engage and sustain meaningful consultation with shareholders and Proxy Advisers alike.

You can download the full report here

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