EQ Proxy: Governance Update - Key Themes

Remuneration Policy Developments:

Restricted Stock Units (RSUs)

• Increased uptake of RSUs in director LTIPs, primarily via hybrid plans. 

Changes to Dilution Limits and Bonus Deferral Practices

• Following the IA’s updated Principles of Remuneration, several companies have proposed the removal of legacy dilution limits and adjustments to bonus deferral arrangements.
• These changes have generally been well received by proxy advisors and investors.

Removal of Banker’s Bonus Cap

• In the financial services sector, several UK-listed banks have implemented changes following the removal of the EU-derived bonus cap, shifting the balance from fixed to variable pay.
• This has generally received support from shareholders, but proxy advisor support remains mixed. 

US Impact:

• UK-listed companies are increasingly aligning their remuneration schemes with the US market norms to compete for talent, often citing significant US-based operations and talent pool.
• The concern around UK companies considering US listings has reignited concerns about the relative competitiveness and attractiveness of the UK stock market.
• As markets in the US move away from the promotion of Diversity and ESG, the question remains, will US institutional investors reflect this in their voting in the UK?

Activism:

• There has been a material increase in shareholder proposal activity, with the number of proposals rising from three in 2024 to thirty-four in 2025.
• This significant escalation is primarily attributable to heightened shareholder activism, most notably driven by Saba Capital’s campaign activity earlier in the year.

Shareholder Engagement:

• The most successful campaigns, particularly where challenging proposals were passed, were attributable to good shareholder relationships, and early consultation and engagement.
• Targeted messaging and constructive feedback during the pre-announcement phase have led to the refinement of resolutions, resulting in better outcomes.
• Understanding the extent of voting discretion, within a managed holding, has become even more important; as more institutions offer investor choice it may not always be possible to rely on the entire holding voting the same way.
• Understanding the beneficial owner structure can be key. 
• Reconciliations of previous years' voting has proven valuable, particularly ahead of a Remuneration Policy year, to better anticipate voting behaviours and engagement pathways.

Resolutions Receiving Sub 80% Support:

• In 2025, the number of resolutions receiving less than 80% shareholder support rose significantly to 72, up from 43 in 2024. 
• The most significant increase was observed across remuneration-related resolutions. 
• We’ve observed a greater risk appetite among issuers, with boards increasingly accepting that securing shareholder support of greater than 80% may no longer be achievable. Instead, the focus has shifted toward ensuring resolutions simply pass. 

Climate-related Resolutions:

• From January to May 2024, there were five Say on Climate resolutions. During the same period in 2025, only three such resolutions were put forward.
• This reduction may, in part, reflect the typical three-year cycle on which many companies table climate-related votes, suggesting greater clarity may emerge in 2026 as the next cycle matures.
• It is also possible that shareholders are increasingly opting to address climate concerns through alternative mechanisms, such as voting against directors.
• Below are two articles investigating climate-related resolutions
  
  • Climate Change Resolutions: UK Interim Review (December 2024)
  • EQ Advisory: Climate Change Resolutions (March 2024)

Industry Changes:

• The Financial Reporting Council (FRC) unveiled insights from its discussion paper titled “Opportunities for Future UK Digital Reporting”.
  
  • The paper underscores strong stakeholder support for enhanced digital reporting, with broad consensus on its value.
  • Concerns were raised around the associated costs, particularly for smaller entities.
• The FRC also published their UK Stewardship Code 2026, including overhauls aiming to help companies report with greater ease.
  
  • Initial responses to the revised Code have been varied, reflecting differing perspectives across the market on the balance between regulatory simplification and the need to uphold robust stewardship standards. 
    
    • PIRC issued a response to the publication of the new stewardship code, calling it “A step in the wrong direction”.
    • The Investment Association (IA) issued the following response “The new Code provides a clear focus on stewardship delivering long term sustainable value for clients whilst meeting any specific objectives and has been broadly supported by the investment industry.”
    • Some stakeholders have also expressed concern over the removal of environmental and societal references from the FRC’s updated definition of stewardship.
• The government introduced legislation to establish the Private Intermittent Securities and Capital Exchange System (PISCES)
  
  • The FCA is expected to release the rules governing PISCES, including rules around disclosure and operator oversight, as the legislation took effect on 5 June 2025.

Coming Up:

We hope you enjoyed reading our snapshot of the Proxy Season so far, if so, please look out for our next publication, our Mid Season Review, which we will deliver to your inbox soon.

Having worked on over 80 meetings so far this season we have been able to follow the changes in the market as they have developed. If you have any questions or feel we can assist with your meeting or other corporate events please contact us.

Authors:

Contact:

Will King
Director - Business Development
EQ Advisory, UK Shareholder Services
will.king@boudiccaproxy.com
D: +44 (0)207 183 6596
M: +44 (0)7958 437 205