Whether it’s Rio Tinto, GlaxoSmithKline, Glencore or Lloyds Bank, there’s always a good reason for shareholders to take part in the annual general meeting. Here are some of those you’ll want to watch over the next few months.
Whether it’s climate change, boardroom pay or the fight against obesity, there are plenty of reasons why shareholders should pay close attention to this year’s AGM season.
Voting at these events can be a powerful tool for change, but shareholders have to flex their collective muscle to hold management to account for their decisions.
Last year’s AGM season showed shareholders can make a difference, with many more FTSE 100-listed companies attracting low votes on their remuneration.
AstraZeneca (LSE:AZN), for example, saw almost 40% of votes cast against the company's remuneration policy, where the potential maximum long-term share award for CEO Pascal Soriot increased to 650% of his £1.3 million base salary, from 550% last time.
Protest votes above 20% usually require a company to take another look at their decision-making and to hold further discussions with shareholders.
This has been the case at Rio Tinto (LSE:RIO), where anger over payments made to departing executives in the wake of the Juukan Gorge scandal led to last year’s remuneration report being rejected by more than 60% of votes.
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As we report below, the mining giant has since made a number of further changes to its pay policies in response to shareholder feedback.
Climate change is likely to feature heavily in this year’s AGM season, with Barclays (LSE:BARC) among those putting their strategy, targets and progress to an advisory vote.
The build-up to the Unilever (LSE:ULVR) AGM has focused on a campaign by responsible investment group ShareAction to get the Pot Noodle maker to adopt ambitious targets to increase the share of healthy foods in its sales.
Its special resolution has since been withdrawn after the company agreed to publicly report the performance of its product portfolio against at least six government-endorsed nutrition benchmarks. These will be subject to shareholder scrutiny at future AGMs.
The AGM season gets under way in earnest at the end of April, but annual reports and the list of resolutions should now be available in AGM notices posted on company websites.
Through attendance, you will be doing your bit for shareholder democracy as well as improving your understanding of the business where your money is invested.
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The top three stocks voted by ii customers last year were Shell (LSE:SHEL), Lloyds (LSE:LLOY) and BP (LSE:BP.), with GlaxoSmithKline (LSE:GSK), AstraZeneca and Scottish Mortgage (LSE:SMT) also making in the top 10.
Key dates in this year’s AGM calendar include 28 April for Glencore (LSE:GLEN), ITV (LSE:ITV) and British American Tobacco (LSE:BATS) and 12 May for Rolls-Royce (LSE:RR.), Lloyds Banking Group and BP. Many companies are likely to hold hybrid meetings enabling shareholders to attend, vote and raise questions by electronic means or in person if they wish.
NatWest (LSE:NWG) shareholders are being invited to attend a "live" virtual shareholder event at 5pm on 21 April. By holding this event as well as the physical AGM a week later, shareholders will have two opportunities to hear from board members and to ask questions prior to voting on the business of the AGM. Here are some of the AGM dates confirmed so far:
13 April: Smith & Nephew (LSE:SN.)
19 April: Anglo American (LSE:AAL)
4 May: Barclays, GlaxoSmithKline, Unilever
6 May: Rightmove (LSE:RMV)
9 May: Aviva (LSE:AV.)
12 May: BP, Lloyds Banking Group, Rolls-Royce
24 May: Shell
26 May: Prudential (LSE:PRU)
Customers with shares in most of these companies should have been notified by now that they are eligible to place a vote via ii’s ‘voting mailbox’ service.
Over the next few weeks, we will endeavour to provide previews on many of the major blue-chip meetings in order to help investors in their decision-making.
When: 11am, Friday 8 April.
Where: QEII Conference Centre, Broad Sanctuary, Westminster, London SW1P 3EE.
How to participate: Shareholders wishing to attend virtually can do so through the Lumi platform, which offers the ability to watch the meeting live, vote and ask questions. To vote ahead of the meeting, shareholders must return their proxy voting instructions by 11am, Wednesday 6 April. The meeting for Australian shareholders of Rio Tinto Limited takes place in Melbourne on 5 May, after which the results of both AGMs will be published. More details on the London AGM can be found here.
Who’s in the chair? Simon Thompson became chairman in 2018 and is leaving the board after the AGM. He will be replaced by Dominic Barton, who worked for 30 years at McKinsey.
How did the company do in the year to 31 December? Commodity price strength fuelled by the economic recovery helped the mining giant achieve record financial results, with free cash flow of $17.7 billion (£13.4 billion) and underlying earnings of $21.4 billion (£16.2 billion). It declared its highest ever total dividend of 756.42p a share costing $16.8 billion (£12.8 billion) and representing a payout ratio worth 79% of earnings. A final dividend of 306.72p a share worth $6.7 billion (£5.1 billion) and a second special dividend in the year of 45.6p a share will be paid on 21 April.
How did shares perform? Down 10.6% to 4,892p.
How much is the boss paid? Jakob Stausholm, who joined Rio in 2018 and stepped up from chief financial officer in January 2021, is on a basic salary of almost £1.2 million. His total remuneration came to £2.8 million for the most recent financial year after he received cash and deferred shares worth £1.4 million from a short-term bonus scheme. The award was based on 64% of his targets being met under financial, ESG, safety and individual metrics.
How did last year’s AGM go? Shareholders were angered by pay deals awarded to departing executives including Jean-Sébastien Jacques in the wake of the destruction of the ancient Juukan Gorge shelters. This led to more than 60% of votes being against the remuneration report, although 96.8% supported the three-year remuneration policy.
How has the company responded? Rio addressed some of the issues through a new pay policy approved at last year’s AGM. This included clawback to cover events that impact on the company’s social licence and the incorporation of deeper ESG targets in the short-term incentive plan. It said legal advice remains that greater sanctions are not possible in respect of the previous awards, however it has made two further changes to its policy in response to shareholder concerns. These include the creation of a Consequence Management Framework to test the extent that incentive pay is fair, appropriate and defendable, as well as a change in the structure of leaver provisions in its long-term incentive plan.
What’s the view of voting agencies? Glass Lewis has recommended shareholders support the annual remuneration report.
Is there a resolution on climate change? For the first time, the company is putting a non-binding advisory ‘say on climate’ resolution for approval. The strategy includes plans for growth in materials such as copper and lithium that are essential for the energy transition, as well as more challenging Scope 1 and 2 carbon reduction targets in its own operations. Rio has also set out its goals to work with customers and suppliers in industries such as steel and aluminium so it can reduce its indirect Scope 3 emissions.
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