Several FTSE 100 companies will hold annual shareholder meetings in the coming week, with potentially contentious votes on climate issues and pay, including at Glencore PLC (LSE:GLEN), HSBC Holdings PLC (LSE:HSBA) and AstraZeneca PLC (LSE:AZN).
Annual general meetings also offer investors large and small the chance to question and challenge directors on their boards, with investors in funds also keen that their asset managers walk their marketing talk on environmental, social and governance (ESG) issues.
HSBC, as one of the leading funders of oil and gas expansion despite stated commitments to Net Zero targets, is one company that should expect to face criticism and potentially a so-called bloody nose on its climate vote.
NatWest Group PLC (LSE:NWG), which also holds its AGM this week, should not expect to get away lightly either, having also been mentioned in the oil report. It also faces a vote on a new pay policy too.
Following regulatory changes that made it mandatory for the UK’s largest companies to disclose their climate impact, the upcoming AGMs for London Stock Exchange PLC and Glencore will be putting their climate transition reports up for scrutiny, with voting agencies recommending voting against the latter's report.
Elsewhere, British American Tobacco PLC (LSE:BATS) and AstraZeneca return after making changes in response to a large number of dissenting shareholders on pay issues last year.
Shareholders urged to get involved
Engagement between shareholders and companies is good for both sides, says ShareAction, which each year sends activists to ask questions at more than 100 AGMs.
Companies, if they engage, can anticipate and navigate risks, identify opportunities, and ensure long-term success, while on the other side, Simon Rawson, ShareAction's director of corporate engagement, says AGM questions have been seen to "provide the nudge that leads companies to become accredited Living Wage employers, transition to renewable energy supplies, and set science-based climate targets".
Interactive investor (ii), the UK’s second largest DIY investment platform, positions itself as a champion of greater access to voting for private investors, having last year opted in all customers to its voting and information service, where previously the automatic position was all customers were opted out.
“We see time and again how effective professional activist investors can be at achieving change at underperforming companies, and how management can be held to account by smaller shareholders, especially if they vote in numbers," said Lee Wild, head of equity strategy at ii, which helped provide much of the information below.
Late April AGMs to watch
London Stock Exchange PLC
When and where: 10.30am, Wednesday 27 April, London
Participation: Shareholders are requested to bring photo ID if they are planning to attend the event. Proxy voting forms need to be returned by 10.30am on Monday 25 April.
Financial performance: Strong revenues growth across all divisions, cost synergies and the benefits of a long-term debt refinancing resulted in pre-tax profits rising 26.8% to £2.3 billion. Adjusted earnings lifted 46.5% to 286.7p a share. A final dividend of 70p a share is 27% higher than a year ago and is due for payment on 25 May, taking the total for the year to 95p a share.
Share performance: Up 5% to 8,052p over the past 12 months.
Pay performance: David Schwimmer’s salary jumped by 24% to £983,000 as a result of his increased responsibilities following the acquisition of data business Refinitiv. His annual bonus came to £1.6 million, representing 72% of the maximum opportunity. The £3.6 million vesting of long-term shares granted in 2019 took total remuneration to £6.4 million.
AGM form guide: The big pay rise for Schwimmer resulted in 23% of votes going against the annual remuneration report as some shareholders told the company they would have preferred to see the increase take place in stages.
Climate vote? Resolution 4 is an advisory vote to approve the company’s Climate Transition Plan. This includes a strategy for achieving climate commitments and emissions reductions and also describes how the company is integrating climate change considerations into its products and services.
Diversity performance: There’s a near equal gender split on the board, though this split falls to just 33% for women in senior management roles. It meets the Parker review recommendation to have one director from an ethnic minority background on the board.
Voting agency view: With no changes to base salaries this year, Glass Lewis recommends support for the remuneration report. However, it believes shareholders should abstain from the advisory vote on the climate transition plan. While there are no areas of significant concerns with the plan, it is unhappy about a lack of disclosure on how the company intends to use and interpret the vote in its strategy-setting process.
Glencore PLC
When and where: 12 noon (central Europe time), Thursday 28 April, Zug, Switzerland.
Participation: To vote on the resolutions, shareholders should return proxy forms by 12 noon central Europe time on Tuesday 26 April. Questions for the board should be submitted to investors@glencore.com by the same deadline.
News: New chair Kalidas Madhavpeddi was appointed in July last year. Just ahead of its climate vote, the Swiss colossus reported that its direct Co2 emissions increased last year.
Financial performance: Amid a mining bull market and with a focus on metals demanded for the 'energy transition' (though it generates about 10-15% of underlying earnings through coal), the mining giant reported adjusted earnings up 84% to $21.3bn (£16.3bn). Net debt fell by US$9.8bn to US$6bn and the company declared US$2.8bn of shareholder returns. For 2022, Glencore has recommended a US$0.26 base distribution worth $3.4bn payable in two equal instalments.
Share performance: Up 67% to 490.3p.
Pay performance: Gary Nagle was appointed on a salary of $1.8 million (£1.4 million), some 24.4% higher than his predecessor. There is no change in the figure for 2022. Nagle’s total remuneration for 2021 came to $3.2 million after he secured a $2.1 million annual bonus. Four fatalities within the company during the year meant downward discretion was applied to the award, reducing it from 98.5% of the maximum opportunity to 93.6%.
AGM form guide: The remuneration report got 91.3% of votes in favour but the company’s binding vote on remuneration policy, which takes place every three years, saw 25.8% of votes against. In response to criticism about Nagle’s arrangements, Glencore said his pay was positioned “competitively but not excessively” versus FTSE 30 companies and that it contained an appropriate mix of rewards for short and long-term performance.
Climate vote? Having received 94% support for its climate transition action plan at 2021’s AGM, the company is putting a progress report to an advisory vote. Its Scope 1 carbon dioxide equivalent (CO2e) emissions - those made by the company directly - grew to 15.0mln tonnes (Mt) from 14.8Mt in 2020, while its Scope 2 location-based emissions rose to 10.8Mt from 9.4Mt, it said ahead of the report. While announcing it aims to achieve net-zero total emissions by 2050, including a 15% reduction by 2026 and a 50% reduction by 2035 versus 2019 levels, Glencore has been doing well from coal of late, and recently completed an acquisition of the Cerrejón thermal coal mine.
Voting agency view: Glass Lewis is concerned that the board is seeking shareholder approval on climate through an up/down vote, thus removing some level of accountability from directors. It said corporate governance dictates that shareholders should elect the board and that the board should oversee management and the execution of the strategy of a company. “Shareholders can then hold board members accountable for their failure to execute a strategy that serves shareholders’ best interests through the election of directors.” Glass Lewis recommends shareholders vote against the climate progress report but support the annual remuneration report.
Diversity performance: Glencore’s gender split at board level is above the recommended 33% but 15% for senior management positions. During the year it developed its first diversity and inclusion strategy. The company meets the Parker review target for one director from an ethnic minority background.
NatWest Group PLC
When and where: 2pm, Thursday 28 April, Edinburgh.
Participation: Shareholders will be able to attend the AGM in person and the meeting is also being broadcast live via a Zoom webinar. A “live” virtual shareholder event is being held a week before the AGM at 5pm on Thursday 21 April, providing shareholders with the chance to engage with board members and ask questions prior to voting on this year’s resolutions. The proxy voting deadline is 2pm, Tuesday 26 April. More details on the AGM can be found here.
News: NatWest is no longer a state-owned bank, after the UK government’s stake fell below 50% last month.
Financial performance: The state-backed lender returned to profitability and distributed more than £3.8 billion of capital to its shareholders, including £1.7 billion to the taxpayer. The operating profit of £4 billion reflected impairment releases of £1.3 billion as well as growth in net lending of £7.8 billion in 2021 and the removal of a further £256 million of costs. A final dividend of 7.5p a share is due to be paid on 4 May along with a share buyback programme during the first half of this year.
Share performance: Up 18% to 226.3p.
Pay performance: Boss Alison Rose’s salary has just been increased 2% to £1.12mln, the first change since her appointment in 2019. Her total remuneration for 2021 came to £3.6mln after the payment of a fixed share allowance equivalent to £1.1mln and the vesting of shares granted in 2019 worth £1.2mln. The current policy, which was introduced in 2017 and renewed in 2020, supported a culture of prudent risk taking, with significantly restrained variable pay in return for more consistent pay outcomes, but as it moves out of government control, the bank is moving pay policies into line with standard market practice. The new policy will see maximum variable pay set at 100% of base salary for the annual bonus and 150% of base salary for restricted share plan (RSP) awards.
Voting agency view: Glass Lewis is opposed to the remuneration policy after questioning the move away from a long-term incentive plan (LTIP). It adds that RSPs are uncommon among the company's peers, the majority of which operate standard LTIPs “with clearly defined and quantifiable performance criteria measured over three years.” The agency said: “We are concerned by the increase in overall incentive opportunity and the introduction of an RSP absent a compelling strategic rationale for this type of award structure.” It recommends support for the annual remuneration report.
AGM form guide: The remuneration report was backed with more than 99% of votes in favour.
Climate vote? Shareholders are being asked to approve the company’s climate strategy, including an ambition to at least halve the climate impact of its financing activity by 2030 and to be net zero by 2050. It intends to publish a climate transition plan in next year’s annual report and for annual updates over the following years. Glass Lewis has recommended shareholders vote in favour of the Say on Climate resolution.
Diversity performance: At the end of 2021 the board exceeded the recommendation of the FTSE Women Leaders Review for 33% female representation. It also met the requirements of the Parker Review for at least one director from an ethnic minority background.
British American Tobacco PLC
When and where: 11.30am, Thursday 28 April, London.
Participation: Shareholders unable to attend the meeting can submit questions online at bat.com/agm by 20 April. It will endeavour to publish responses before the proxy voting deadline of 11.30am on Tuesday 26 April.
Financial performance: Revenues fell 0.4% to £25.7 billion but the figure from new categories rose 51% to £2.2 billion. Constant currency adjusted earnings per share growth of 6.6% was at the top end of its guidance, with nearly £10 billion of net cash generated from operating activities. A dividend of 217.8p a share has increased 1% and will be paid in four instalments of 54.45p a share on 4 May, 17 August, 10 November and 2 February. It has pledged a £2 billion share repurchase programme for 2022.
Shares' performance: Up 22% at 3,344pp.
Pay performance: Total remuneration for Jack Bowles came to £7.5 million last year. As well as his basic salary of £1.3 million he got £2.8 million of cash and shares from a short-term bonus scheme where he achieved 86% of the maximum opportunity. A further £2.8 million came from the vesting of long-term incentives awarded in 2019.
AGM form guide: About 38% of shareholders voted against the remuneration report, with their discontent focused on fixed pay increases awarded in 2020 and 2021. Following consultation with shareholders, its new remuneration policy strengthens the focus of incentive plans on revenue growth and improving profitability in new categories. No material changes have been proposed to the policy, which is subject to a binding shareholder vote every three years.
Voting agency view: Glass Lewis believes shareholders can be satisfied with the company’s response to last year’s AGM dissent, including the decision to freeze executive salary levels for 2022. It recommends support for the separate resolutions on the annual remuneration report and the remuneration policy.
Climate vote? There’s no vote but the annual report includes some discussion on the company’s commitment to net zero value chain emissions by 2050.
Diversity performance: Board-level gender diversity was 40% at the end of 2021. Its diversity and inclusion ambitions for 2025 include having women in 40% of senior leadership team roles and 45% of management roles. It meets the recommendation to have at least one board director from an ethnic minority background.
HSBC Holdings PLC
When and where: 11am, Friday 29 April, London.
Participation: Shareholders wishing to participate electronically should view the webcast via the Lumi AGM website in order to vote and ask questions. Proxy voting forms need to be returned no later than 11am Wednesday 27 April.
Financial performance: Reported profit before tax rose $10.1 billion (£7.7 billion) to $18.9 billion (£14.5 billion), driven by a net release of expected credit losses and other impairment charges. Revenues fell 2% to $49.6 billion (£38 billion), primarily due to the impact of lower interest rates and a decrease at the Markets and Securities arm against a strong comparative period. The net interest margin of 1.20% was down 12 basis points from 2020, but with stabilisation in the second half of 2021. A second interim dividend of $0.18 a share, which will be paid on 28 April, made a total for 2021 of $0.25 a share.
Share performance: Up 37% to 448.65p (518.2p on Wednesday).
Pay performance: The base salary for Noel Quinn increased in March by 3.5% to £1.34 million. He also gets a fixed pay allowance of £1.7 million, released in shares over five years. This allows the bank to maintain competitive pay levels and remain compliant with EU regulations on the ratio of variable to fixed pay. Quinn also got cash and deferred shares worth £1.59 million based on 57.3% of the maximum available from a short-term bonus scheme, bringing his total remuneration for the year to £4.9 million. The last triennial vote on policy in 2019 got 97% support and subsequent AGMs have seen strong votes in favour of the 2020 and 2021 remuneration reports. The updated policy due for approval at this year’s AGM contains no changes to the fixed or variable pay structure and approach.
Voting agency view: Glass Lewis recommends support for the advisory vote on the remuneration report and the binding vote on the new remuneration policy.
Climate vote: A special climate change resolution, which focused on HSBC’s plans for a net zero aligned finance strategy by 2050, received 99% support at last year’s AGM. An update on progress appears in this year’s annual report. However, many investors will not be comfortable and may wish to oppose the vote, in light of the bank being the biggest European funder of oil and gas expansion despite its net-zero pledge. Research from Share Action showed HSBC pumped US$59bn into oil companies including the likes of BP and Exxon. HSBC was one of the banks accused of 'greenwashing', with research finding a “stark disconnect between what [companies including HSBC] say about climate change and what they’re actually doing,".
Diversity performance: Board-level gender diversity was 38% at the end of 2021 but will drop below the recommended 33% because of the retirements of Pauline van der Meer Mohr and Irene Lee after the AGM. It meets the Parker review recommendation for at least one director from an ethnic minority background.
AstraZeneca PLC
When and where: 2.30pm. Friday 29 April, London.
Participation: Shareholders are requested to register their questions in advance and can do so through the company’s website by the close of Tuesday 26 April. Proxy voting forms should be returned no later than 2.30pm on Wednesday 27 April. A webcast of the meeting will be accessible via the company’s website. More details on the AGM can be found here.
Succession: Leif Johansson was chief executive of Volvo from 1997 to 2011 and prior to that at Electrolux. He has been Astra’s chairman since June 2012, and while his tenure is longer than the recommended nine years, the 70-year-old is standing at the AGM for another year in order to facilitate succession planning.
Financial performance: Total revenues including Covid-19 vaccines increased 41% to $37.4 billion (£28.6 billion) as five of its 13 blockbuster medicines crossed new sales thresholds. It also completed the acquisition of rare disease specialist Alexion. Core earnings per share rose 32% on a constant currency basis to $5.29 (£4.05) and the company declared a total dividend of $2.87 a share. This included the recent payment of a second interim dividend of $1.97 a share.
Share performance: Up 37% to 10,490p.
AGM form guide: Last year, the resolution on a new remuneration policy was opposed by almost 40% of votes. In a year when Soriot’s single figure remuneration came to £15.9 million, Astra acknowledged some shareholder concern around the scale of the pay opportunity in a UK context. However, Astra said a more common complaint was its decision to seek a new remuneration policy at two consecutive AGMs, and in a challenging period because of the pandemic. After last year’s AGM, Astra highlighted a “remarkable turnaround” in performance since Soriot’s appointment, resulting in a total shareholder return close to 300% over the eight years and 77% over the last three years.
Pay performance: Pascal Soriot’s salary has increased 3% for this year to £1.37 million. His total remuneration for 2021 came to £13.86 million, reflecting £9 million from a long-term incentive scheme that will vest in 2024. He also got cash and shares worth £3.1 million based on 95% of the maximum opportunity under a short-term bonus scheme. In response to the AGM last year Astra said it is committed to a period of stability in its approach to executive remuneration. The current pay policy will remain in effect until 2024 and it has not made any material changes to the structure of executive rewards in 2022, beyond an increase in base pay in line with the wider UK workforce.
Voting agency view: Glass Lewis said Soriot’s remuneration outpaced others at country and industry level, but notes that this is largely due to long-term incentive awards which vested in the past fiscal year. It also highlights that new chief financial officer Aradhana Sarin has been appointed on a base salary of £850,000, some 7.9% higher than her predecessor. However, given Sarin’s recent and relevant experience at Alexion it says this does not warrant shareholder action. In light of the company’s other assurances following last year’s AGM, it recommends support for the annual remuneration report.
Climate vote? There’s no vote but Astra says it is one of only seven companies worldwide (and the only pharmaceutical firm) to have its climate targets verified by the Science Based Targets initiative.
Diversity performance: Following Sarin’s appointment there are five women on the board, or 38% of the total. At the end of 2021, women represented 41.8% of the senior executive team. The company also meets the recommendation of the Parker review to have at least one director from an ethnic minority background.