FTSE100 DRRs – Another Shareholder Spring?

There were a further 12 FTSE100 AGMs last week and whilst for most companies both sections of the Directors’ Remuneration Report received a high vote in favour, a couple of companies felt the wrath of shareholders.

Reckitt Benckiser Group’s implementation report was only approved by 68.5% of shareholders last Wednesday.  The forward looking policy report faired only a little better, receiving a vote of 80.2% in favour. Not exactly unequivocal support.  The shareholder revolt against the backward looking report appears to be due to concerns on how clear the company’s bonus structure was.  The company expects to address these concerns in its next annual report.

The large vote against the implementation report follows the votes against Barclays, AstraZeneca and Pearson’s reports a couple of weeks ago (as detailed in our previous post). As more companies are facing shareholder rebellions it is becoming reminiscent of the shareholder spring of 2012. Perhaps rejuvenated by the new DRR regulations and the increased spotlight on executive pay, shareholders are once again using the AGM to display their discontent.

However, so far the companies which have received votes against their implementation reports have had high votes for their policy reports, the forward looking, binding part of the DRR. Standard Chartered turned this on its head last week. Only 59.2% of shareholders approved the policy report compared to 94.6% approving the implementation report. Standard Chartered have narrowly passed the threshold of 50% and will not technically need to put the policy up for another vote for the next three years. However, the high percentage of votes against the policy will surely mean a need for further dialogue with shareholders and it will be interesting to see if the company decides to put the policy up for a vote again next year due to shareholder pressure. Having a pay policy that is voted on is new territory for remuneration committee members and shareholders alike. If shareholders start to rebel against the policy it could be a new look shareholder spring, with shareholders exercising even more influence over the pay of executive directors.

All the other companies whose reports were voted on last week received votes of over 90% for the implementation report and policy report. Whitbread was the only FTSE 100 company to publish its DRR last week. Full details of the votes and the DRRs can be found in our single source document.