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2022 November Proxy Governance

2022 November Proxy Governance Update

24 November 2022

In September we were delighted to hand over to you, the CGPro Network and our readers, to solicit feedback as to how 2022 has been for you so far. This move was provoked by our findings from the 2022 AGM season so far.

CGPro Network Survey

Olayinka Agbede Olayinka Agbede Principal Corporate Governance Officer

To achieve this, we asked that as many of our readers and CGPro Network members participate in completing a survey. We are pleased to report that a fair number of this community and readers responded and as promised this edition features the results and findings which we hope will be of benefit to the whole network.

The resultant insights have proved valuable, in highlighting issues that some have found onerous, to which we have sought to shed some light. Every view expressed was crucial in giving us a glimpse into issues that are at the fore of governance professionals’ minds and vying for their attention. This update edition features information to take into consideration and steps that can be taken to help steer the highlighted issue to a positive resolution. Additionally, we offer insights into elements that are in focus and requiring action as we come to the end of the season and look forward to 2023.

Thought For November

”With thanks to those people who responded to the survey, we’re pleased to be able offer insights to help fellow corporate governance professionals. As we build our engagement with our network, I’d like to encourage each one of you to engage, share your experience and build your own connections. A supportive community built on trust and shared experience helps each one of us to be the best we can be”.

- Anne-Marie Clarke, ACG, CGPro Network Chair and Head of Corporate Governance, Boudicca

Another event that truly showed that sense of community was the annual Chartered Governance Institute UK & Ireland Awards held at the London Hilton Park Lane on Thursday 10 November 2022. Congratulations to every winner, every shortlisted nominee and everyone who attended the event. We were delighted to be part of that evening and catch up with friends, old and new, colleagues and clients. Here are a few memories from that evening.

Chartered Governance Institute UK & Ireland Awards London Hilton Park Lane

​And our survey said….


It is no surprise that the topic of remuneration is still very much expressed as a concern, and an area of continued challenge by survey respondents. While a larger 41.2% reported that they found it extremely or very challenging, it was good to observe that 35.3% of you did not consider it much of an issue. Interestingly, the topmost elements of remuneration that presented as most challenging this season was fairly evenly split between LTIP, Annual bonus outcomes and performance targets, amongst our survey responses. This was closely followed by base salaries.

Taking account of the responses received in relation to resolutions which received less than 80% support, a small number of survey responders mentioned that their Remuneration Policy resolutions had received just under 80% support, whilst two others reported that their Remuneration Report and a new share plan had received below 80% support.

As reported at the AGM Forum hosted by EQ in September, while most remuneration related resolutions still received high levels of support, it is not a time to be complacent as average votes in favour of FTSE 100 companies’ remuneration policy resolutions has continued to see a decline – falling below 90% for the first time in 2021.

It should be noted that the Financial Reporting Council (FRC) in its letter to Remuneration Committee Chairs dated August 2022, has set out their expectations for the coming year. It was highlighted in the FRC’s communication that “The current economic environment is both a current and future risk that we expect you to take into consideration when designing and reviewing the remuneration policies and practices and the incentives created”. As such any proposals to increase executive remuneration over the coming years are to be analysed in the context of the significant inflationary and cost of living pressures that are leading to a real decline in wages for many people and will require significant justification. This sentiment was equally echoed by the Investment Association (IA) in their updated guidelines and letter issued in November 2022. Whist the IA has decided not to make significant changes to the Principles of Remuneration this year, they have updated the Principles to set out investor support for NEDs to be paid fees which reflect the reality of the time commitment, complexity and skillset required for their role and expectations of the Board and their shareholders.

Director elections

While it is good to note that a marked number of participants stated that there had been an absence of issues requiring attention in relation to their director election resolutions, in our 2022 Mid-season review we highlighted that the level of overall opposition by investors had increased, whilst Proxy Advisors (PAs) Glass Lewis (GL) and Institutional Shareholder Services (ISS) were more supportive of director elections during the 2022 proxy voting season than in the previous two years.

This elevated level of opposition to director elections is among some of the things we’ve experienced this year in supporting our client base, with overboarding and independence being part of the sub categories where shareholder dissent was registered. While a majority of our respondents expressed that they did not have any particular need to address any of the sub categories referenced in the survey question, in relation to their individual organisation, a significant number did report that they have had to deal with opposition in relation to the independence levels on the board and/or committees and diversity.

Overboarding registered as the third sub category to attract votes against directors, with responses confirming that 23.5% of our participants needed to address this area, with the issue in the last tangible category being the independence of individual directors.

ESG – Climate Change

The 2022 proxy season has been the busiest ever, with shareholders voting on a bout of new environmental and social proposals. It is also a turning point for shareholders hoping to push companies on environmental, social and governance (ESG), as more ambitious shareholder proposals meet concerns about the global economy.

We learnt from the responses to the survey questions pertaining to climate change that most participants worked at organisations which had not proposed a climate related resolution during the recent AGM season, with only 6.3% confirming that their boards had laid such resolutions before their shareholders. Further, 25% expressed that they were thinking about taking the step and the remaining 12.5% voiced that it was not currently being considered. In summary, despite growing consensus that the integration of relevant ESG factors into company value creation models and corporate reporting is important, listed companies and organisations providing reporting standards have yet to coalesce on an approach to the treatment and inclusion of ESG factors in company disclosure and reporting.

It would be a misconception to believe that progress in this area seems to be focused largely on the implementation of TCFD (Taskforce on Climate Related Financial Disclosures) reporting and disclosure requirements and adherence to these (by means of either ‘comply or explain’), as opposed to progressing the discussions being had around climate change and its impact. This whole exercise has undoubtedly been frustrated by measurement challenges and the endogenous nature of many ESG risks within companies. A survey respondent expressed that the creation of a board sponsored ESG committee has helped to transform the level of focus.

Conversely, with the introduction of the reporting disclosures, TCFD reporting has been prioritised over the past year according to one respondent, and we expect that will be a sentiment echoed throughout our readership. This is evidenced by the 31.3% who responded that there was no sense of urgency of board focus and action on climate change, being that it had been on their board agenda for a while and was well embedded. Encouragingly 37.5% affirmed that there was a need for climate change to be a subject of board focus and action, and taken together with the aforesaid 31.3%, that gives a total 68.8% with Board focus.

Given the sheer scope of the debate on how best to deliver alignment around reporting standards, governance professionals can be forgiven for rightly or wrongly ascribing priority to sustaining the business by taking the steps to firstly, get the issue on the board agenda and secondly, to comply with reporting and disclosure requirements through demonstrable action, in introducing a robust ESG governance framework to ensure rigour in the way in which objectives are set and commitments delivered. This framework, alongside other commensurate displays of focus and attention, should be positively received by PAs and investors alike.

A related point to note is the acceleration of the trend, which has seen a significant number of companies including some element of ESG performance in their executive remuneration plans.

AGM/GM resolution challenges

Another issue aired in this survey is a focus on the parts of the resolutions proposed at AGM/GMs this year which proved onerous. There was a range of differing opinions among respondents, from those that expressed that their resolutions proved absolutely onerous and left them questioning the need to have AGMs at all, to barely registering any challenge, with some participants at the opposite end of the spectrum stating that they found theirs an absolute delight and one participant remarked on the good support received from their registrars.

The consensus is that the remuneration report and remuneration policy both proved tasking, with the need to ensure that the right engagement took place with investors, not only on the remuneration resolutions, but all the AGM resolutions. Undertaking a shareholder consultation exercise on the remuneration policy or other remuneration related matters is no small feat, as those acquainted with the process will no doubt acknowledge. The process calls for shareholders to be consulted from inception of ideas, to ensure that the company obtains their ‘buy in’ and ultimately, support of the resulting policy or plan at the subsequent shareholder meeting where it is submitted for approval. It is my opinion that the overriding sentiment behind this process was cogently captured by a participant who stated that “the need for tenacity in encouraging stakeholders to engage, and the need for engagement and influencing strategies to encourage investors and their governance teams to look beyond sole reliance on PA reports”.

In considering how to best achieve this feat, it is our recommendation that companies bring on board the expertise within our Corporate Governance team at EQ, as we can offer practical support through the lifecycle of the process, from drafting or review of the shareholder consultation collaterals, to inputting into the design of remuneration models and helping to organise the shareholder roadshow process. We can even help with providing contact details to the governance teams within respective institutional investors, right through to undertaking a proxy solicitation campaign to deliver the necessary votes at AGMs.

Taking a few moments to unpack another element of the resolutions proposed at AGMs which presented some difficulty, a survey participant found that the pre-emption (5% + 5%) resolution was particularly onerous. It is interesting to note that the Pre-Emption Group (PEG) has issued a revised statement of principles and updated template resolutions following the UK Secondary Capital Raising Review (SCRR) which published its report in July 2022. The revised principles include shareholder approval for disapplication resolutions up to 20%, on a 10%+10% basis.  Of course, issuers may choose to stay with the current guidelines whilst this beds in.

What’s on the horizon?

For Corporate Governance professionals, it is no stretch of the imagination to believe that the majority will concur with the response from one of the survey participants and acknowledge that an important aspect/perspective of the role that is of most interest and under constant focus is ‘How to deal with all the changing regulations / technical changes and scope of the role’.

Survey responders’ expressed anxiety in keeping abreast of changes on the horizon and were unanimous in their quest to understand a myriad of topics such as remuneration – share plans best practice, TCFD, shareholder voice and relevant themes for AIM listed companies. We understand that all these issues can be a bit daunting and sometimes overwhelming, which is why our insights and experience from working year-on year with investors and PAs can be relied upon to gain a better understanding of where investors' perspectives and minimum requirements differ from proxy advisory agencies' core requirements in most situations which might arise.

Whilst there were a myriad of topics for focus, two notable standouts were around improving disclosures and embracing the improvements on non-financial controls, reporting and data collection envisioned through the expected Audit Reform and Corporate Governance legislation.

Highlights of the Corporate Governance professional

Commentary by Anne-Marie Clarke, ACG, Head of Corporate Governance and CGPro Network Chair.

We ended our survey focussing on you, the corporate governance professional.

Firstly we asked what had been a highlight during the year. It was notable that virtually all responses concentrated on matters to do with their role, demonstrating the true commitment of the corporate governance professional to deliver for their Board and company. Topics included publishing Annual Reports, improving governance practices, getting ESG on the agenda and successfully transitioning the Board and Chair whilst achieving diversity targets. Each of these is a huge undertaking and everyone should feel rightly proud in delivering these results.

The AGM was mentioned by a number of respondents, again a huge undertaking, with one respondent commenting that there seemed to be some movement in the digital AGM agenda.

And finally, whilst only one respondent commented in this area, we noted the value clearly expressed with this thought “Returning to in person events again and sharing war stories and best practice”.

We also asked the question, if you had one wish for the corporate governance professional, what would it be? The over-riding sentiment was around recognition, internally and externally, and having more time and/or resource – a sentiment which probably underlined the comment by one respondent who said “Abolish AGMs!”

We’ll be coming back to explore some of these topics. If anyone has any perspective or advice in these areas that you would be happy to share in a future article, please do get in touch.

In the meantime, we would encourage us all to have a voice, be part of consultations, be part of the debate with professional bodies, and take every little step to shape the change you want to see. Corporate governance professionals are an inspiring and dedicated group of people, let’s remember and celebrate this.

Finally, we asked what topics/themes/perspectives are of most interest to you, and we will endeavour to explore these in our coming updates.  Best practice on various topics was highlighted, a theme we can agree with and we are often advising our clients on. A positive sentiment was expressed on wanting to understand investor’s perspectives and the strategies for engaging with investors, again a daily discussion and advice given here at Boudicca. One respondent wanted to maximise opportunities to be an advisor across the business and be the conscience of the business, a truly inspirational ambition, and one which every corporate governance professional can aspire to be.

Round up

With December literally just around the corner, we’ll be coming back to you with Part 2 of our Mid-season review, where we’ll be looking in more depth at the investor rationale to voting behaviour in 2022. We will also be updating you on COP27 findings and expectations shortly, so watch this space! And of course we will be preparing to bring you the updates to new proxy advisor policies and investor voting guidance and notable expectations as we journey into the new year ahead. An early glimpse into this area is the recently published ISS 2023 benchmark policy consultation. ISS anticipates issuing its final 2023 benchmark policy changes by around the first week of December 2022 with the revised policies being applied to shareholder meetings held on or after 1 February 2023. The consultation is available from

If you would like to understand more about the CGPro Network or require support and advice on any ESG topic, please do contact us. And if you would like to receive our regular updates directly into your inbox, please email:

To access the Governance Update Series, please visit here.


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