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Julia Irvine 19 Dec 2017 02:12pm

Companies face greater scrutiny from investors

The scale of shareholder rebellion is far wider than the few high profile agm showdowns that have hit the headlines in recent months

A new public register, launched by the Investment Association today, shows that in 2017 more than one in five (22%) FTSE listed companies either withdrew a resolution ahead of their agm or received votes of 20% or over against a particular resolution.

Data from these cases show that pay-related issues dominated the list of shareholder concerns during the year. Nearly four out of 10 (38%) resolutions attracting adverse shareholder comment related to companies’ annual remuneration reports, remuneration policy or other remuneration related resolutions.

Another resolution that shareholders frequently took issue with in 2017 was the re-election of company directors – one in three (32%) gained a high number of votes against.

The data also reveals that only 31% of the companies had provided a public statement explaining how they were addressing their shareholders’ concerns.

The register was set up in response to a request from government as a way of keeping track on companies that receive more than 20% of votes against a resolution and any steps they take to remedy the situation.

Investment Association chief executive Chris Cummings said that it had shown for the first time the real extent to which UK-based investment managers – who, between them, own over a third of the FTSE – were increasingly flexing their muscles by exercising their vote.

“With over one fifth of the FTSE All-Share having faced large shareholder opposition in 2017, a significant number of companies need to seriously start listening to shareholder views and acting on them,” he stressed.

“Bringing all this information into one place and giving companies the chance to explain how they are responding to the high vote against, will be invaluable in helping our members put savers’ money to work in the UK’s best run companies.”

Business secretary Gregg Clark welcomed the launch of the register which he sees as an important  contribution towards maintaining the UK’s reputation as a safe and reliable place to do business.

While most companies have implemented responsible business practices, there was a minority that threatened to undermine that reputation, he said.

“It is right that we review and refresh our standards to ensure we continue to have the highest reputation. This world-first public register does exactly that, shining a spotlight on how companies respond to shareholders’ concerns over important decisions, including executive pay packages.

“This will help to strengthen transparency and corporate accountability and build on our reputation as a world-leading business environment – a key foundation of our industrial strategy.”

The register, which will be updated on an ongoing basis, includes a description of the resolution the result of the shareholder vote, a link to the agm results announcement and a link to any additional statement the company has made on the steps it has taken to address the issues since the vote.

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