Interactive Investor

Your vote counts: BP, Aviva, Rolls-Royce and Lloyds

29th April 2022 12:08

Graeme Evans from interactive investor

With AGM season at full throttle, shareholders can choose how they attend and vote at these four major ‘hybrid' investor meetings.

In-person AGMs for BP (LSE:BP.), Aviva (LSE:AV.), Rolls-Royce (LSE:RR.) and Lloyds Banking Group (LSE:LLOY) are taking place for the first time in three years, as the season for shareholder meetings hits top gear. 

The difference with the AGMs held before Covid-19 is that these popular blue-chip company events will be live-streamed in order to maximise shareholder engagement.

There should be plenty to consider at all four meetings, including at BP where theres an advisory vote on the energy giants climate change report.

Charlie Nunn attends his first AGM as boss of Lloyds Banking Group, while Rolls-Royce shareholders will have the engine giants recovery milestones in their sights. At Aviva, the second of two meetings on 9 May will approve the insurers £3.75 billion return of capital.

Lloyds Banking Group 

When: 11am, Thursday 12 May.

Where: Edinburgh International Conference Centre, The Exchange, EH3 8EE. The companys articles of association require it to hold its AGM in Scotland.

How to participate: the AGM will be available to watch remotely via a live webcast, but there will be no repeat of last years virtual shareholder engagement event. For shareholders unable to attend, questions can be submitted to ShareholderQuestions@lloydsbanking.com. Proxy voting instructions must be received by Equiniti no later than 11am on Tuesday 10 May. More AGM details can be found here.

Whos in the chair? Robin Budenberg, the former chief executive and chairman of UK Financial Investments, has been in the role since January 2021.

How did the company do in 2021? Statutory pre-tax profits of £6.9 billion benefited from a 9% rise in net income to £15.8 billion and £1.2 billion write-back of previous impairments. Tangible net asset value per share of 57.5p rose 5.2p on a year earlier. The company intends to pay a final dividend of 1.33p a share on 19 May, bringing the total for the year to 2p a share.

How have shares performed? Up 31% to 47.8p (46.31p on Thursday).

How much is the boss paid? Group chief executive Charlie Nunn, who took on the role in August, was recruited on a salary some 13% below that of his predecessor Sir Antonio Horta-Osorio. The figure has been increased for this year by 1% to £1.14 million and he also gets an unchanged fixed share award of £1.05 million, which will be released in equal tranches over three years. Nunns total remuneration for 2021 came to £5.5 million, mainly due to £4.2 million of cash and shares that replaced unvested awards and a missed bonus opportunity from previous employer HSBC. The Lloyds short-term bonus scheme paid 57.8% of the maximum opportunity, meaning that Nunn got £348,648 in cash and shares from his five months at the helm.

How much did his predecessor get? Sir Antonio stepped down as chief executive last April, having been in the role for a decade. His total Lloyds shareholding at the end of 2021 was worth £15.4 million, with two-thirds of these shares owned outright and the rest yet to vest. His total remuneration for last year came to £2.5 million, including £1.2 million from a long-term incentive plan and £345,000 from the companys short-term bonus scheme.

Whats the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the remuneration report. It is concerned that Nunns recruitment awards will not be subject to performance conditions, but recognises that they are subject to vesting schedules and retention periods that match those forfeited. It says the board should undertake a review of its succession planning to ensure that such awards are not necessary in the future.

How did last years AGM go? The annual remuneration report was approved with 94.35% of votes in favour.

Is there a climate-related vote? The company said the decision not to hold a vote reflects its own progress in incorporating climate change into its strategy and business operations, as well as the evolving best practice for climate votes. Lloyds has said it will review its position on future votes on a year-by-year basis. The companys annual report contains disclosure on its efforts to be net zero on emissions it finances by 2050 or sooner.

How is the company doing on diversity? Women held four of ten boardroom posts at the end of 2021. The company is committed to maintaining at least three female board members and over time will aim to reach 50% representation. The percentage of board members from an ethnic minority background is 20%.

BP 

When: 1pm, Thursday 12 May.

Where: ExCeL London, One Western Gateway, Royal Victoria Dock, London E16 1XL.

How to participate: shareholders are able to join the AGM via BPs electronic meeting platform, which offers the opportunity to vote during the event. Those voting in advance should do so no later than 1pm, Tuesday 10 May. More AGM details can be found here.

Whos in the chair? Helge Lund was appointed in January 2019, having served as chief executive of BG Group from 2015 until its merger with Shell in 2016.

How did the company do in 2021? Underlying replacement cost profit was $7.6 billion (£6 billion), driven by higher oil and gas prices and refining margins and stronger trading results. Net debt reduced for the seventh quarter in a row to $30.6 billion (£24 billion) at the end of 2021. BP announced a dividend of 5.46 cents a share for the fourth quarter of the year, which was paid in March and brought the total for 2021 to 21.63 cents a share.

How have shares performed? Up 30% to 330.5p (388.05p on Thursday).

How much is the boss paid? Chief executive Bernard Looneys basic salary is due to increase by 4.25% to £1.39 million from the date of the AGM, a rise in line with most of the UK workforce. His total remuneration for 2021 came to £4.46 million, including cash and shares worth £2.42 million based on 80.5% of the maximum annual bonus opportunity. He also got shares worth £493,365 from the 2019 long-term incentive scheme, which vested at 30% of the maximum.

Whats the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report. In relation to this years 6.6% salary rise for chief financial officer Murray Auchincloss to £800,000, it accepts that this is justified given that Auchincloss was initially appointed at a level significantly below that of his predecessor.

How did last years AGM go? The remuneration report got 95.20% of votes in favour. A Follow This special resolution on climate change targets was rejected by 79% to 21%.

Is there a climate-related vote? An advisory vote will ask shareholders to approve BPs Net Zero – from ambition to action report. The move follows Februarys update to some of the companys net zero aims of two years earlier. Changes included the acceleration of its 2030 reduction target for scope 1 and 2 emissions from its own operations to 50% from 30-35%, as well as a tougher approach to cutting the carbon intensity of the energy products it sells. A further shareholder vote is likely to take place in 2025, when BPs current targets end. 

And what about the Follow This vote? A special resolution tabled through the green lobby group calls on BP to set and publish targets that are consistent with the goals of the Paris Climate Agreement. BP says the resolution is little changed from the one rejected last year, adding that it already has a net zero ambition as well as aims that are collectively consistent with the Paris agreement.

How is the company doing on diversity? The overall proportion of women employed across BP remained at 39% in 2021, with 40% boardroom representation at the end of the year. The company met the recommendations of the Parker review to have at least one member of its board from an ethnic minority background.

Rolls-Royce

When: 11am, Thursday 12 May.

Where: Rolls-Royce Flight Operations Centre, 4 Vanguard Road, East Midlands Airport, Derby, DE74 2SA.

How to participate:  there is a livestream of the AGM and shareholders will be able to ask questions relating to the resolutions at the meeting and vote. Questions can also be submitted in advance to governanceteam@rolls-royce.com by 11am on Tuesday 10 May. The same deadline applies to the return of proxy voting forms. More AGM details can be found here.

Whos in the chair? Anita Frew is hosting her first Rolls-Royce AGM. She is also chair of Croda International.

How did the company do in 2021? Revenues of £10.9 billion were slightly lower, but underlying profits of £414 million marked a recovery from the previous years loss, driven by significant cost savings in civil aerospace, the companys continued resilience in defence and strong growth in the power systems division.

How have shares performed? Up 10.5% to 122.88p (83.31p on Thursday).

How much is the boss paid? A 2.5% pay rise in March for Warren East  — only his second since being appointed in January 2016 — has taken his basic salary to £967,088. About 30% of Easts salary was deferred last year into shares for two years. Total remuneration for 2021 came to £3.95 million, including £2.9 million from a new incentive plan that has been built around the delivery of an improved financial performance. All of the incentive awards are deferred into shares - 40% for three years and 60% for four years.

Whats the view of voting agencies? Glass Lewis supports the companys annual remuneration report. However, it notes that incentive awards made in 2021 are measured on a one-year performance timeline, with up to 40% of the 2022 and 2023 awards incorporating long-term metrics. The agency says shareholders may be concerned that the plan risks encouraging executives to place undue emphasis on short-term performance.

How did last years AGM go? The companys new remuneration policy was supported with 97.04% of votes in favour, while the annual remuneration report got 99.06%.

Is there a climate-related vote? No. Details on the companys climate change position appear in the annual report, including its target to achieve net zero greenhouse gas emissions by 2030 from all energy purchased and consumed in its buildings.

How is the company doing on diversity? Board gender diversity increased during the year to 38%. In the executive team the figure is 9%, which Rolls has pledged to improve through a focus on succession planning. There is one person of colour on the board.

Aviva

When: 1pm, Monday 9 May.

Where: Queen Elizabeth II Centre, Broad Sanctuary, Westminster, London SW1P 3EE.

How to participate: shareholders who attend the meeting electronically can vote online and ask questions during the meeting using the Lumi system. Proxy voting forms should be returned by 1pm, Thursday 5 May. More AGM details can be found here.

Why is there a separate general meeting? Aviva needs to get shareholder approval for a £3.75 billion return of capital, which involves the payment  of 101.69p a share and accompanying 76 for 100 share consolidation.

Whos in the chair? George Culmer, the former chief financial officer of Lloyds Banking Group, has been in the role since May 2020.

How did the company do in 2021? Aviva saw record net flows in savings and retirement of £10 billion and its highest general insurance gross written premiums in over a decade, up 6% to £8.8 billion. Profits from continuing operations fell 10% to £1.63 billion. A final dividend of 14.7p a share will be paid on 18 May, raising the total dividend for the year by 5% to 22.05p. A £1 billion share buyback was completed on 31 March.

How does the capital return work? This is being done via a B share scheme, which should complete on 31 May.  Shareholders will receive one B share for each existing ordinary share held, with B shares redeemed for cash. A share consolidation will also take place, with the aim of ensuring that the market price of Aviva shares remains consistent. A shareholder with 100 shares will receive cash of £100 via the B share scheme, and will have a remaining holding in Aviva of 75 new ordinary shares.

How have shares performed? Up 26.2% to 410.4p (431.2p on Thursday).

How much is the boss paid? Amanda Blanc, who took on the chief executive role in July 2020, has received a 3% pay rise for 2022, taking her basic salary to £1.03 million. Her total remuneration for 2021 came to just over £3 million after the annual bonus scheme delivered cash and deferred shares worth £1.77 million, based on Blanc achieving 88.3% of the maximum opportunity. 

Whats the view of voting agencies? Glass Lewis has recommended shareholders vote in favour of the annual remuneration report. It highlights that long-term incentives are usually 300% of base salary but that Blancs grant for 2022 has been extended to 350%. As this is within previously approved limits, the agency says it does not warrant shareholder action.

How did last years AGM go? The directorsremuneration policy and the annual remuneration report were both approved with about 97% of votes in favour.

Is there a climate-related vote? The company has been an advocate for listed companies to publish consistent information on climate risks and the impact on their businesses. A resolution tabled at its AGM is an advisory vote on the companys Climate-Related Financial Disclosure around the themes of governance, strategy, risk management and metrics and targets. Details of Avivas disclosures for 2021 appear in the annual report.

How is the company doing on diversity? The gender split on the board was 41.7% female at the end of 2021, with a figure of 33.7% for senior leadership. Aviva meets the Parker Review target to have at least one director from an ethnic minority background, accounting for 8%.

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