Governance Watch - November 2020: The rise of shareholder dissent

Professional Pensions
clock • 4 min read

Manifest-Minerva's Thomas Bolger takes a look at key issues at upcoming AGMs, focusing this month on the rise of shareholder dissent.

The 2020 annual general meeting (AGM) season has taken place in unprecedented times, with the coronavirus pandemic causing severe economic and social costs globally. The world and business landscape have changed, and as a result, boards and investors are facing new and challenging decisions.

Within this context, Minerva Analytics' 2020 UK Voting Review found that the average overall dissent across all resolutions considered at shareholder meetings of the UK's largest 350 companies was 3.13% in 2020 (January to August). This is above both the 2.93% level for the whole of 2019 and currently stands at its highest level in seven years.

The chart above shows the number of companies and the number of resolutions that received 20% or more dissent since 2014 - when shareholders were given a binding vote on remuneration policy. It shows that a greater number of resolutions have received high dissent in 2020 compared to 2019. The data also suggests dissent has been more concentrated, indicating that shareholders are "picking their battles", which has resulted in a smaller number of companies receiving high dissent but a larger number of resolutions with high dissent.

Of the 63 companies receiving high dissent on at least one resolution this year, 46% were repeat offenders, i.e. the company also received high dissent in 2019. This would seem to suggest a breakdown in communication: either companies are not listening to feedback, or shareholders are not explaining effectively - or possibly a mixture of both. It does not help either shareholders or boards when most companies have a 31 December year end and hold their AGMs within a narrow sixweek window. The engagement process this year will have also been impacted by the coronavirus pandemic.

The number of defeated management-proposed resolutions and successful shareholder proposals have also increased. In 2020, 21 resolutions have been voted down by shareholders compared to five in the whole of 2019, and 12 shareholder proposals have been successful compared to only one in 2019. This increase has been impacted by the ongoing shareholder fight over the future direction of Petropavlovsk plc and the composition of its board. All 12 successful shareholder proposals and nine of the defeated managementproposed resolutions occurred at Petropavlovsk.

The report found that shareholder dissent has increased this year. This could be expected given the increased scrutiny boards find themselves under during this time of crisis and the evolving public expectations on the roles and responsibilities of businesses.

Governance practices and, in particular, executive remuneration and the treatment of stakeholders are under even closer scrutiny from shareholders, employees, regulators and governments.

Thomas Bolger is stewardship team leader at Manifest-Minerva

 

Annual General Meetings in November

Company

FTSE Index Event Date Event Type Proxy Deadline
Genesis Emerging Markets Fund FTSE 250 2 Nov 20 AGM 29 Oct 20
Manchester & London Investment Trust FTSE SmallCap 2 Nov 20 AGM 31 Oct 20
GCP Student Living FTSE 250 4 Nov 20 AGM 2 Nov 20
Hansard Global FTSE Fledgling 4 Nov 20 AGM 2 Nov 20
JPMorgan Global Growth & Income FTSE SmallCap 4 Nov 20 AGM 2 Nov 20
Wilmington FTSE Fledgling 4 Nov 20 AGM 2 Nov 20
JPMorgan Emerging Markets Investment Trust FTSE 250 5 Nov 20 AGM 3 Nov 20
Redrow FTSE 250 6 Nov 20 AGM 4 Nov 20
Pacific Horizon Investment Trust FTSE SmallCap 10 Nov 20 AGM 6 Nov 20
Hays FTSE 250 11 Nov 20 AGM 9 Nov 20
Rank Group FTSE 250 11 Nov 20 AGM 9 Nov 20
James Halstead AIM 12 Nov 20 AGM 10 Nov 20
Ricardo FTSE SmallCap 12 Nov 20 AGM 10 Nov 20
DFS Furniture FTSE SmallCap 13 Nov 20 AGM 11 Nov 20
Galliford Try FTSE SmallCap 13 Nov 20 AGM 11 Nov 20
European Opportunities Trust FTSE 250 16 Nov 20 AGM 12 Nov 20
Smiths Group FTSE 100 16 Nov 20 AGM 14 Nov 20
BMO Real Estate Investments FTSE SmallCap 17 Nov 20 AGM 13 Nov 20
Craneware AIM 17 Nov 20 AGM Not Yet Disclosed/Collected
Dunelm Group FTSE 250 17 Nov 20 AGM 13 Nov 20
Avingtrans AIM 18 Nov 20 AGM 16 Nov 20
Henderson EuroTrust FTSE SmallCap 18 Nov 20 AGM 16 Nov 20
Picton Property Income FTSE SmallCap 18 Nov 20 AGM 16 Nov 20
Close Brothers Group FTSE 250 19 Nov 20 AGM 17 Nov 20
Finsbury Food Group AIM 19 Nov 20 AGM Not Yet Disclosed/Collected
McBride FTSE SmallCap 23 Nov 20 AGM Not Yet Disclosed/Collected
Go-Ahead Group FTSE SmallCap 24 Nov 20 AGM 20 Nov 20
JPMorgan Smaller Companies Investment Trust FTSE SmallCap 24 Nov 20 AGM 20 Nov 20
Genus FTSE 250 25 Nov 20 AGM 23 Nov 20
Clinigen Group AIM 26 Nov 20 AGM 24 Nov 20
CVS Group AIM 26 Nov 20 AGM Not Yet Disclosed/Collected
DX (Group) AIM 26 Nov 20 AGM Not Yet Disclosed/Collected
Hotel Chocolat Group AIM 27 Nov 20 AGM 25 Nov 20
Murray Income Trust FTSE SmallCap 27 Nov 20 AGM 25 Nov 20
Macau Property Opportunities Fund FTSE Fledgling 30 Nov 20 AGM Not Yet Disclosed/Collected

Source: Manifest-Minerva

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