There has been an increase in the number of companies putting forward a dividend resolution for approval in 2021 compared to 2020.
Not surprisingly, due to the difficult trading conditions brought about by the pandemic, companies paying a final dividend fell from 72% to 48% in 2020. This figure has increased during the 2021 AGM season to 55%.
It is clear that many companies are still taking a cautious approach to paying money to shareholders when many businesses have been badly affected by COVID-19.
Re-appointment of auditors and auditor fees
The re-appointment of auditors and approval of arrangements for the auditor’s remuneration have always received very high levels of support and this year proved no exception as the statistics below show.
However, the number of companies for which one of these resolutions received the lowest number of votes for out of all the resolutions increased from 11 in 2020 to 20 in 2021, an increase of nearly 50%.
This may reflect the continuing focus on the audit market and auditor independence following the recommendations of the major reviews into different aspects of the audit market in recent years. These include the Brydon review, the review by Sir John Kingman into the Financial Reporting Council and the Competition and Markets Authority review of the audit market and the BEIS Committee report into the collapse of Thomas Cook.
Based on their recommendations, the UK Government has published proposed legislation for audit reform and is currently reviewing the responses to the consultation on this legislation. It is expected that final proposals for audit reform legislation will be published later in 2021.
In to 2022
As we head into 2022, we expect both of these trends to continue. Previously, the cancellation of the dividend resolution often provoked questioning from shareholders particularly asking companies to confirm that directors would also receive pay or bonus cuts. As we head into 2022, we expect companies to continue their cautious approach to dividends, bearing in mind the impact this will subsequently have on executive pay.
About the statistics
- Unless otherwise indicated, statistics quoted in this article are taken from research undertaken by Equiniti’s AGM team. The statistics include all companies in the FTSE 100 and FTSE 250 indices as well as Equiniti clients outside of these indices (referred to as other/smaller). All 2021 statistics are for the 2020/21 year ended on 31 July 2021.
- Statistics based on Equiniti clients only.