Evidence of revolt at every single level
THE shareholder spring has sprung. Since proxy season started, we’ve become accustomed to the sight of investors giving directors a bloody nose. I’ve decided to crunch the numbers to see just how rebellious the buy side has become.
A win is a win. Just three firms have been voted down at their annual meetings in this proxy season. Cairn and Pendragon both saw 67 per cent of investors vote against their remuneration reports while 54 per cent of Aviva investors did the same.
Except a win isn’t a win. A total shareholder rebellion (votes against plus votes withheld) of over thirty per cent is a big problem for a company’s management and directors. Trinity Mirror suffered this fate despite sacrificing its chief executive after 54 per cent of investors refused to back its remuneration report, as did William Hill (51 per cent), UBM (47 per cent), Inmarsat (40 per cent), UTV (35 per cent), Xstrata (36.5 per cent), Prudential (33 per cent), Cookson (32 per cent), Barclays (31.5 per cent) and Smith & Nephew (30 per cent).
Even those firms who are winning the backing of the vast majority of shareholders are seeing much higher levels of dissent. In 2011, the average level of shareholder dissent against FTSE 350 remuneration reports was 8.6 per cent. By my calculations based on the proxy season so far, that number is now around 14 per cent.
So if we take the average level as 14 per cent, the list of firms who have under-performed grows to include: Reckitt Benckiser (16 per cent); Centrica (16 per cent); 888 (17 per cent); Michael Page (17 per cent); Tullett Prebon (19 per cent); Resolution (19 per cent); Carillion (20 per cent); Clarkson (21 per cent); and Tullow Oil (26 per cent).
And if we were to set the bar at the 2011 average of 8.6 per cent, the list of firms includes: Restaurant Group (nine per cent); RSA (nine per cent); Unilever (nine per cent); Old Mutual (10 per cent); Standard Chartered (10 per cent); Jupiter (11 per cent); Aegis (12 per cent); and SIG (13 per cent).
So there you have it – evidence of an investor revolt at every level, even for those firms who aren’t making the headlines. Long may it continue.
david.crow@cityam.com
Twitter: @davidcrow83