Most Significant Votes (w/e 3rd May 2024)

Paul Lee

Head of Stewardship & Sustainable Investment Strategy
(Friday, May, 03, 2024)
|   6 mins

Welcome back to Most Significant Votes! We again bring you highlights of the key AGM decisions that matter to asset owners and on which they might wish to hold their fund managers accountable, as selected and discussed by Paul Lee, Redington’s Head of Stewardship & Sustainable Investment Strategy. This run of the MSV blog covers the main Northern Hemisphere voting season.

The most striking voting results this fortnight were at Australian fossil fuel firm Woodside Energy (AGM 24th April). Not only was its so-called say-on-climate resolution (formally a non-binding proposal to approve the company’s Climate Transition Action Plan and 2023 Progress Report) defeated, with 60% of shareholders opposing it (including 4% abstentions) but Woodside’s long-standing chair, Richard Goyder, faced a 17% vote against his reappointment. Given that this is a binding vote on a key individual’s re-election, there is a higher bar for investors to choose to vote against – and Goyder may have headed off some votes by making clear this will be his last year on the board – making this level of discontent perhaps even more remarkable than that for the say-on-climate vote. The company took on BHP’s oil and gas assets in 2022 and still seems set on its plans for growth in its gas operations, but clearly has work to do to convince shareholders that this is the right strategy.

Bank of America (AGM 24th April) faced two shareholder resolutions on climate matters. One urged that the bank’s lobbying be aligned with its stated climate goals. 29% of shareholders voted in favour. Meanwhile, a proposal seeking disclosure of the ratio between lending to fossil fuel businesses and to clean energy operations won 27% support. An identical resolution at Goldman Sachs (AGM 24th April) was backed by 30% of its investors. Similarly popular there was a proposal calling for pay equity reporting across race and gender characteristics. Investors also sought greater lobbying transparency from the bank, with 40% supporting that shareholder resolution. More mundane, not least after the tumult of last year’s takeover of Swiss banking rival Credit Suisse, was this year’s meeting for UBS (AGM 24th April). Pay is still an issue for some shareholders, though, with 16% opposition to the bank’s remuneration report. CEO Sergio Ermotti was paid Swfr14.4 million in 2023 (up from Swfr12.6 million).

Swiss food giant Nestle (AGM 18th April) faced a shareholder resolution calling for it to focus more on healthier food options and away from unhealthy offerings. With a product range from coffee to chocolate, this is potentially quite a stretch, though the company has had a focus on healthy eating for some time. The 12% backing for the resolution (including 1% abstentions) is probably enough for proponents to deem it a success but it is not the most ringing endorsement from shareholders, who still tend to neglect health issues. Meanwhile, the chair Paul Bulcke also faced 12% opposition to his election. As we have seen elsewhere this voting season, investors are taking a stronger stance on chairs who are former CEOs of the business, like Bulcke; this clearly raises questions about the independence they can bring to the role.

Rival Swiss chocolatier Lindt & Sprüngli (AGM 18th April) faced more traditional investor ire, with the remuneration report facing opposition of 33%, or 46% of the shareholders other than the foundations created to maintain control of the company. Executive chair Ernst Tanner, who has been on the board continuously since 1993 and is a former CEO of the business, witnessed a 21% vote against his reelection, or 29% of independent investors – similar numbers opposed the appointment of non-executive director Rudolf Sprüngli to the remuneration committee. And 9% of shareholders (12% of those other than the foundations) opposed the appointment of PricewaterhouseCoopers, which has been the auditor now for more than 20 years.

Ferrari (AGM 17th April), the storied Italian car brand, is in fact listed in the Netherlands, which has long permitted the dual-class share structure that enables its founding family to maintain voting dominance (wielding 52% of the votes while owning 35% of the common stock). The broader shareholder base is clearly unimpressed by the board that results from this structure: two family members, executive chair John Elkann and non-executive vice-chair Piero Ferrari, faced votes against of 15% and 11% (40% and 30% respectively once the family votes are excluded). The board also favours scions of other wealthy business families, with both Delphine Arnault (whose family controls luxury goods firm LVMH) and Adam Keswick (of Hong Kong’s Jardine Matheson) as non-executive directors. Both are busy executives at their respective family groups so the votes in opposition reflect this apparent lack of time to commit to Ferrari as well as possible perceptions of non-independence. Arnault faced 8% opposition (22% from the non-Ferraris) and Keswick 12% (or 32%). In all, seven of the 11 board members faced opposition from independent shareholders of 15% or more.

The following day, Delphine was not herself up for re-election to the board of LVMH (AGM 18th April), but three of her brothers were among the four proposed candidates – two of them for the first time, both being around the age of 30. Together with their father, Bernard Arnault, who remains chair and CEO, following the AGM the family holds 5 of LVMH’s 16 board seats as well as nearly 49% of its shares and more than 64% of voting rights. Independent shareholders clearly did not wholly welcome this further dominance by the family: there was 7% opposition to the appointments of Alexandre and Frédéric, or 27% from those who don’t share their surname, and a slightly higher opposition to the reappointment of brother Antoine, amounting to 28% of the non-Arnault vote. But more striking were the votes on various other resolutions: the vote seeking approval of related party agreements was opposed by 18% of shareholders, or 69% of those not called Arnault; the report on the 2023 pay for Arnault père was opposed by 17%, or 63% of those who aren’t his own family – while the forward-looking pay policy for him was opposed by 19% (or 70%). Two further resolutions on pay in 2023 also faced that same level of 17%, or 63%, opposition, and a resolution seeking authority to issue shares to employees and senior officers was opposed by 16% of shareholders, or 58% of those not from the Arnault family.

The equivalent resolution was the most controversial at French luxury rival Kering (AGM 25th April), with 16% of shareholders opposing it – or 52% of those other than chair and CEO Francois Pinault’s Artémis group, which owns 42% of the shares and controls 59% of the votes. In addition, Jean-Pierre Denis, who has been a non-executive director since 2008 and is therefore acknowledged not to be independent under the French code, saw 10% of votes against his re-election, or 32% of those other than Artémis. Related party transactions were also unpopular, with the headline 12% opposition representing 39% from the independent shareholders.

Nearly 9% of shareholders at Unilever (AGM 1st May) declined to approve the company’s Climate Transition Action Plan (its ‘say-on-climate’ vote), though the rebuke is tempered by the fact that more than six of those percentage points were abstentions rather than outright opposition. Otherwise in the UK, the only issue that seemed to matter was pay, with most of the attention on companies seeking to increase the reward for their CEOs – in each case, arguing that the increase was necessary to ensure pay was competitive with US rivals.

Most notable was the vote at medical devices firm Smith & Nephew (AGM 1st May) where the proposal was to boost the CEO’s pay by almost 30% to nearly $12 million (Deepak Nath is based in the US). More than 43% of shareholders voted against the remuneration policy. Slightly more, 44%, opposed the new restricted share plan that is the main vehicle for this increase and incorporates poor US structures such as shares starting to be released within a year of award. The company reports a ratio of CEO to median employee pay of 72:1 in 2023; following the changes, this could more than double next year. Chair Rupert Soames, who had led the sales pitch for the new approach, faced 18% opposition to his re-election (including 3% abstentions).

Serco (AGM 24th April), the outsourcing firm where Soames was CEO until last year, faced 10% opposition to its remuneration report, but nearer 17% opposition to its remuneration policy. Its new CEO Mark Irwin was paid under £2 million in the year, 60 times the median worker’s pay – though as the company notes this reflects it being his first year in the role and is set to at least double from 2025 as Irwin’s long-term incentives start to mature and pay out.

London Stock Exchange Group (AGM 25th April) was also seeking a major increase in pay for its CEO, David Schwimmer. In his case, the proposed increase amounted to more than doubling to £13 million. Fewer investors appeared concerned about this, though 11% still voted against the new policy. With much higher paid staff (median pay is over £111,000), Schwimmer’s 2023 £5.1 million total reward led to a pay ratio of 46:1; this is set to increase dramatically in future years.

One company already seen to be paying US levels of remuneration is Pearson (AGM 26th April), with not all investors convinced there is enough linkage to performance. CEO Andy Bird received $14 million in 2023, more than 200 times the median pay at the company. Over 30% of shareholders voted against the remuneration report, and in addition, the opposition to the re-election of remuneration committee chair Shelly Coutu was a remarkable 28%.

Supermarket technology firm Ocado (AGM 29th April) also continues to press the boundaries on pay. 19% of shareholders voted against its remuneration policy – or 23% of those other than the founders. Under the new policy, one of those founders, CEO Tim Steiner, would receive a one-off award of potentially 18 times his salary, triggered if the share price reaches nearly £30 (at the time of writing it’s around £3.50). If that were to happen, the award would be worth well over £100 million, and shareholders overall would be more than £20 billion wealthier.

That’s it for this week. With the voting season heating up, we’ll turn weekly and so will be back with Most Significant Votes on May 10th.

Interested in leveraging these insights and others to hold your investment managers to account more effectively? We’d love to discuss how. Get in touch


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