“No significant changes in AGM logistics compared to 2023”

• May continues to be the busiest month accounting for more than 50% of the meetings held
  
  
• 11am remains the most popular time
  
  
• Between 10am and 12pm account for 70% of the meetings held
  
  
• Whilst London is the location of choice as an average across the FTSE 350 it is clear that this is one area that the FTSE 100 differs with 46% of meetings during this period being held outside of London

“Support levels on average remain high”

• Director elections is the category containing the highest number of resolutions, in line with the UK Corporate Governance Code requirement for annual (re)election of directors
  
  
• Support levels on average remain high
  
  
• All resolutions passed, and notably 2024 saw the highest average support levels of the three years analysed

“Average support levels have shown a significant increase”

•  Whilst this is an advisory resolution on the AGM agenda, it is important to receive good support levels
  
  
• Average support levels have shown a significant increase in 2024, to circa 95%
  
  
• Correspondingly, resolutions receiving less than 80% have shown a significant decrease from 2023 and continue the downward trend since 2022
  
  
• Only 1 Remuneration Report failed in 2024 demonstrating majority alignment between board of directors and shareholders on remuneration decisions

“Given the headwinds we faced, to get 86% approval for the proposals was a great result and perhaps does not reflect how difficult it was to achieve”

• The triennial vote for approval of the Remuneration Policy means that the numbers of resolutions differ year on year, depending on when the policy is submitted for approval
  
  
• Whilst average support levels have decreased in 2024, so have the number of Remuneration Policies being put forward for approval, following 2023 being the year for many policy renewals
  
  
• All Remuneration Policy resolutions were passed, in line with 2022 and 2023, demonstrating majority shareholder alignment with board of director proposals for the executive remuneration framework

“Requesting market norms for these standard AGM resolutions does not necessarily resonate with all of your investor base”

• A standard AGM resolution requiring majority support to pass, share allotment authorities continue to receive an average high level of support at 95%.
  
  
• 5 resolutions received less than 80% support, down from 2023 (6).
  
  
• 2 resolutions failed, in line with 2023. The same companies were impacted indicating recurring shareholder issues with this resolution.
  
  

• Resolutions to disapply pre-emption rights on share allotments require 75% support to pass and can be requested in one or two resolutions in line with the Pre-Emption Group guidelines, which were updated in November 2022
  
  
• Average support levels have shown an increase on 2023, which was the first year of implementation of the new increased maximum limits
  
  
• However, it is notable that average support levels have decreased since 2022, indicating some level of dissent amongst shareholders with the new increased maximum limits
  
  
• 21 more companies sought the enhanced authority limits than in 2023
  
  
• Of those seeking the enhanced authority limits, the balance between the levels sought of 24% and 20% is becoming more even in 2024
  
  
• 4 resolutions received less than 80% support, down from the high of 13 in 2023
  
  
• Only 2 resolutions failed, a positive trend downwards from 8 in 2023

•  Authorising directors to make market purchases of own shares is a standard resolution sought at an AGM, requiring 75% support
  
  
• After a dip in 2023, average support levels have returned to the high levels seen in 2022
  
  
• Only 1 resolution received less than 80% support but still reached the required 75% support level to pass

• 99% of all resolutions proposed received greater than 80% support
  
  
• 2024 shows a positive trend with a reduction in the number of resolutions receiving less than 80% support
  
  
• Director re-election resolutions saw the highest numbers receiving less than 80% support, with an increase over 2023, but no failed resolutions. 
  
  
• The second highest number was for the Remuneration Report, but this category has seen a significant improvement over 2023
  
  
• Failed resolutions have dropped to 9 compared to 14 in 2023. Failed resolutions account for 0.2% of all resolutions proposed, indicating the significant level of support received for resolutions
  
  

The 2018 and 2023 UK Corporate Governance Codes (the ‘Code’) consider 20 per cent or more votes against a resolution as significant. The Code sets out the expectations regarding consultation with shareholders and the explanation of the decisions and actions taken by the board. The typical AGM agenda contains ordinary resolutions, which require 50% of votes cast to be in favour to pass and special resolutions, which require 75% of votes cast to be in favour. Therefore, for the majority of resolutions, a support level of less than 80% does not mean failure of the resolution, and the board can continue with the support received. However, proxy advisory agencies and shareholders will be looking for disclosures and actions to address the 20 per cent or more dissent before voting at the next AGM.

With the new FCA Listing Rule requirements on diversity reporting fully taking effect for 31 December 2023 year-ends, we have observed continuing focus on the expectations of investors.

Female diversity levels at the board level are receiving negative proxy advisor voting recommendations and we have observed some degree of alignment to voting outcomes.

Of note that there are some companies who continue not to disclose either the percentage of its Board that comes from an ethnic minority background or a credible action plan to achieve the Parker Review targets. Whilst we have not observed any significant voting impact as a result of this, we expect this governance topic to gain prominence, with shareholders voicing their concerns through voting actions.

Concerns that directors do not have sufficient time to dedicate to their role are assessed through analysing the roles they have and their attendance at board and committee meetings. The assessment of time commitments and potential concerns on overboarding requires nuanced analysis and we have observed investor policies differing in their approach. This is a perennial topic potentially impacting support for a director’s re-election.

With the introduction of the increased maximum limits for the disapplication of pre-emption rights we have observed an increasing number of companies seeking the increased limits. Given the increasing support levels witnessed during 2024, we expect more companies to request the increased limits going forward as this becomes market practice.

Within investor and proxy advisor voting policies we are increasingly seeing references to the expectations of oversight and governance of cyber security issues and risks. For example Fidelity International in their sustainable investing voting principles and guidelines issued in May 2024 state “Where a company has failed to meet our expectations on matters of data privacy, cybersecurity or digital ethics, we will vote against directors we view as accountable”. Glass Lewis, in their 2024 UK Benchmark Policy Guidelines expanded their policy on cyber risk oversight, including to state that “where a company has been materially impacted by a cyber-attack, Glass Lewis may recommend against appropriate directors should they find the board’s oversight, response or disclosures concerning cyber-security related issued to be insufficient, or not provided to shareholders”

The requirement for premium listed companies under the Listing Rules to make comply or explain disclosures in relation to the recommendations and recommended disclosures of the Task Force on Climate-related Financial Disclosures (TCFD) in their annual financial reports has driven increased reporting. That said, the disclosure of metrics and targets continues to be an area of concern highlighted by IVIS (Institutional Voting Information Service, part of the Investment Association).

Whilst we have observed no significant increases in climate related proposals in the UK, it remains to be seen whether shareholders and companies will remain aligned on expectations and progress towards Net Zero by 2050.

The Financial Reporting Council (FRC) published the revised UK Corporate Governance Code in January 2024. The Code will apply to financial years beginning from 1 January 2025, except for the internal controls declaration which applies to financial years beginning from 1 January 2026. The FRC state that this edition includes a small number of changes from the 2018 Code, but boards will now be asked to make a declaration in relation to the effectiveness of their material internal controls. The strengthening of reporting on internal control systems is expected to evolve over the coming year.  

The 2020 UK Stewardship Code’s sets stewardship standards for those investing money on behalf of savers and pensioners and those that support them. In July 2024, the FRC announced updates to the UK  Stewardship Code and committed to five priority areas, the five Ps: Purpose, Principles, Proxy Advisors, Process and Positioning. EQ will be contributing to the consultation to shape the discussions and outcomes of this review, ensuring the experience and knowledge we have through our support and advice to our clients can have a positive impact for the future of stewardship in the UK.