New register reveals fifth of firms hit by investor revolts in 2017

The UK’s listed companies are being urged to start acting on shareholder concerns around issues like excessive pay after a new Public Register published today for the first time revealed that more than a fifth suffered investor revolts this year.

The amount of firms coming under pressure from stakeholders was revealed in the world’s first ever Public Register of listed companies which have experienced significant shareholder rebellions in the course of the past 12 months.

Launched today by the Investment Association, the trade body whose members own over one third of UK listed companies and manage the pensions of millions of UK households, the register shows that from the AGMs and General Meetings (GM) held in 2017 by more than 640 FTSE All-Share companies, more than one in five (22 per cent) feature on the Public Register due to having at least one resolution that received over 20 per cent dissent or was withdrawn.

Pay-related issues top the list of shareholder concerns, with almost four out of ten (38 per cent) resolutions listed on the Register being due to high votes against pay-related resolutions, such as shareholders voting against companies’ annual remuneration reports, remuneration policy or other remuneration related resolutions.

The second most frequent resolutions are the re-election of company directors with one in three (32 per cent) of resolutions listed on the Register, due to a high vote against the re-election of a company director in 2017.

By publishing the information for the first time in one central location, the Investment Association said the Register aims to increase transparency, accountability and scrutiny of listed companies by shareholders, media and the wider public.

The body said that a key purpose of the Public Register is to “focus attention on how these companies respond to the concerns of their investors. It will highlight the public statements made by the companies on the Register, on how they have addressed shareholders’ concerns”.

Almost one third (31 per cent) of companies named on the register have provided a public response explaining how they are addressing their shareholders’ concerns.

Chris Cummings, CEO of the Investment Association, said: “UK-based Investment Managers own over one third of the FTSE, which means they hold the businesses they invest in, the UK Plcs, to account. Today is another significant step in bringing to life the important role our members play, as we launch the world’s first ever Public Register of shareholder votes.

“The data gathered for the Public Register reveals the true scale of investor concern and shows shareholders flexing their muscles by exercising their votes. 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. 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.

“The Register will be helpful to all listed firms as it highlights the issues investors care most about. It’s also good to see that one third of companies on the Public Register have responded, by publishing a statement on how they are addressing their shareholders’ concerns. We hope more will follow as these statements matter: many of our members have already indicated they are watching how companies on the Register respond as they start to shape their voting decisions for the 2018 AGM season.”

Business Secretary Greg Clark said: “One of Britain’s biggest assets in competing in the global economy is our reputation for being a dependable and confident place in which to do business. Our legal system, our framework of company law and our standards of corporate governance have long been admired around the world.

“Most companies are proactive and thoughtful in implementing responsible business practices but there are a minority of firms that threaten the world leading reputation of our business community.

“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.”