Votes in favour of the Chair
Voting for the Remuneration Committee Chair
Most notable in 2021 was the decrease in the percentage of Remuneration Committee Chairs receiving 95% of more votes in favour (from 83% to 79%). We also saw a significant increase (by 7.5%) in Remuneration Committee Chairs receiving less than 90% of votes in favour.
The increase in dissent centred on concerns over how Remuneration Committees dealt with executive bonuses and pay packages during the pandemic. It also reflects the continuing disquiet over director remuneration generally, with high numbers of votes against remuneration policy and remuneration report resolutions.
Votes in favour of Remuneration Committee Chair
Voting for the Nomination Committee Chair
The Nomination Committee Chair often receives the lowest number of votes for of all the Board Committees.
This is frequently the case where the Chair of the company is also the Nomination Committee Chair, so concerns over governance generally or company performance are reflected in the voting outcome. This year nearly 74% of Nomination Committee Chairs received more than 95% or more of votes in favour compared to almost 79% in 2020. In addition, 26% of chairs received 95% or less votes in favour compared to 21% in 2020.
In their Stewardship and Voting Guidelines for 2021, the Pensions and Lifetime Savings Association (PLSA) included a recommendation that investors should consider voting against the Nomination Committee Chair where there is a failure to meet Davis or Parker report targets for gender and ethnic diversity on boards. It is interesting to note that our analysis showed that this year in particular concerns over board diversity often resulted in high levels of votes against the Nomination Committee Chair.
*The difference in total number of companies is caused by instances where the chair or chair of a committee has stood down at the AGM but the replacement has been made after the AGM or where a company does not have a separate audit, remuneration or nomination committee.
Votes in favour of Nomination Committee Chair
Percentage of Male and Female chairs
This year, we looked at the proportion of male to female Company and Committee Chairs. We can see a small but significant increase in the number of women becoming Chairs of FTSE 350 companies and Audit Committee and Nomination Committee Chairs. Women hold well over half of Remuneration Committee Chair positions, very likely reflecting the high number of women in top human resources jobs.
This shift to greater female representation will be of no surprise, given the drive for diversity and the recognition of its benefits on company boards. It is a trend that is set to continue.
Percentage of Male and Female Chairs
Board Diversity in 2022 and beyond
There has been a concerted drive and some progress made towards having greater diversity on company boards in recent times. Gender diversity has been at the forefront of this but there is recognition that companies have a long way to go to ensure diversity in all its forms including race.
Nomination Committees need to reach the widest selection of candidates possible when recruiting and actively seek to promote diversity on the board as part of their diversity policies so that companies can benefit from having the highest quality management.
About the stats
- 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.