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Sep 08, 2023

Executive compensation resolutions see European shareholder support quiver

Rise in number of shareholders voting against director re-elections, Georgeson finds

More than a third of resolutions relating to executive pay received negative votes from European shareholders during this year’s proxy season, according to a report by shareholder engagement firm Georgeson.

The report finds that across the seven main European markets – the UK, the Netherlands, Germany, Spain, France, Switzerland and Italy – 36 percent of resolutions regarding executive compensation were contested by shareholders. In addition, the number of shareholders voting against director re-elections at AGMs has increased marginally, according to Georgeson research, to 11.7 percent from 11.2 percent in 2022.

Domenic Brancati, global COO of Georgeson, says: ‘Although the numbers show that shareholders in European companies continue to perceive a misalignment between compensation and shareholder interest, investors seem to be taking issue with the way policies are implemented, not how they are structured.

‘Director elections also remain in focus, as shareholders continue to use their votes to express dissatisfaction about specific matters such as board diversity and climate change.’

Climate support grows

This year’s proxy season also marks the third year in a row that European companies experienced say-on-climate resolutions, with notable energy companies like Shell and BP seeing more resolutions.

Georgeson records 24 European companies where climate resolutions were presented at AGMs, slightly down from 36 companies in 2022 but double the 12 seen in 2021.

The UK and France rank top for receiving the most say-on-climate resolutions in the 2023 season, followed by Germany and Portugal, the report finds.

‘Several companies transitioned to a three-year say-on-climate resolution cycle, which may have contributed to the decline in resolutions this proxy season,’ says Daniele Vitale, head of ESG in the UK and Europe at Georgeson. ‘Investors have also conveyed their intention to cast votes against directors they perceive as failing to disclose, manage or oversee climate risk.’