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NAPF publishes its 2015 AGM report

  • Corporate Governance  Image

24 Sep 2015

The National Association of Pension Funds (NAPF) has published its 2015 AGM report (“the report”). This is published in advance of the NAPF updating its Corporate Governance Policy & Voting Guidelines which “aim to assist investors, and their proxy voting agents, in their interpretation of the provisions of the Corporate Governance Code and in forming judgements on the resolutions presented to shareholders at a company’s AGM”.

The NAPF indicates that the report “reflects upon the 2015 AGM reporting season, highlighting positive developments as well as drawing to attention those instances where investors expressed discontent with certain arrangements”. 

The key findings of the report include:

  • It was notable that there has been more “purposeful” engagement between companies and investors.  However, the report indicates that there are a “relatively small number of exceptions”.
  • Executive pay “continues to attract a lot of attention”.  The report cites the report published by The Department for Business, Innovation and Skills (BIS) in March 2015 which although indicated that “most companies……complied with the majority of the requirements in the regulations”, there was a number of notable levels of non-compliance with certain requirements in the Regulations.  The report notes that “many companies have been minded” to take into account recent changes to the UK Corporate Governance Code, even though these were not in force for the 2015 AGM reporting season – especially the requirements on clawback and malus provisions.
  • In terms of disclosure within remuneration reports under the new Regulations, investors see “the issue of disclosure of bonus performance targets” as the area where most progress is needed.  The report also highlights a number of “bigger rebellions” with respect to remuneration reports.
  • There were instances where a director seeking re-election received more than 15% dissent.  The report indicates that the annual election of directors is important in providing accountability to shareholders and highlights that boards and individual directors should “reflect upon instances where these resolutions receive anything less than 90% support”
  • Shareholders consider board refreshment and succession planning as one of the most important issues for consideration.  There is an increasing desire for greater assurance to be provided in relation to succession planning via “transparent reporting and open dialogue”.

Looking ahead to 2016, the report suggests that investors are “eagerly awaiting” responses to the new requirement to publish a viability statement.  The report indicates that “there are no hard and fast rules over what the right time period is for these viability statements and therefore it is likely that, to begin with at least, investors will look across sectors to compare the number of years chosen”.  However it does point out that companies should be clear as to why the chosen period makes sense for their company and that the disclosures should be both “thoughtful and company specific”.  The report also suggests that companies should provide more transparency as to issues related to the composition and management of the workforce as indicated in the NAPF publication ‘Where is the workforce in corporate reporting?’ in June

The press release and full report are available on the NAPF website.

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