Friday, 23 January 2015

Why exec pay oversight can be weak

Because I'm a geeky person, I often search Investegate for AGM results. I just found this RNS announcement from Diploma PLC from Wednesday -
All of the resolutions put to shareholders at the Annual General Meeting were passed by poll votes and the results of the AGM are announced on the Company's website at
Move along, nothing to see here? Well, I'm also a suspicious type, so whenever I see an RNS that doesn't have the actual results in but says check the website later I wonder if someone is trying to bury bad news (though to be fair it looks like this is how Diploma normally reports). So off I go to Diploma's IR site for the AGM results (PDF). And look at the result on the rem report (res 12). Not only is the vote against very big (43%) on a for/against split, if you include abstentions then only a minority actively supported the rem report.

Those of you paying attention at the back will remember that the UK Corporate Governance Code recommends companies to publicly respond to big votes. It says -

When, in the opinion of the board, a significant proportion of votes have been cast against a resolution at any general meeting, the company should explain when announcing the results of voting what actions it intends to take to understand the reasons behind the vote result.

Again to be fair to Diploma they do this. Note 4 to their AGM results, as far down the page as they can put it, says the following:

In relation to Resolution 12 (the Directors’ Remuneration Report) there was a significant proportion of votes that were cast against the Resolution. The Board will consult with those shareholders who voted against this Resolution in order to understand their views. To date six shareholders, representing ca. 10% of the Company’s shares have engaged with the Company regarding their decision to vote against or abstain on this Resolution.

I think they can say meet the requirements of the Code. But I am pretty sure, having been involved in the consultation at points on the last round of exec pay reforms, that people were thinking that companies would stick out RNS announcements about their response to big votes against.

As ever, whenever this stuff isn't properly defined some will find ways to wriggle through the gaps.

No comments: