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Reflections on the proxy voting season - Q2 2021

Date: 15 July 2021

If we look back on the trends in a very busy second quarter in the UK corporate AGM calendar, the one that stands out is pay. And the message being sent to companies is very clear: shareholders are not going to let you get away with discretionary pay decisions (which only seem to be upwards in nature) in the current climate.

This voting season was very different – the period under scrutiny was 2020, a time when different companies and sectors faced different challenges and opportunities.

Voting in action

  • It may feel counterintuitive to vote against the pay package at AstraZeneca for example – of course the company should be applauded for its vaccine work. However, does that mean that the chief executive’s variable pay opportunity (this consists of an annual bonus and a long-term incentive scheme for the CEO in this instance, and is in addition to fixed pay such as his salary) should increase from 650% of salary to 900%? Nearly 40% of shareholders who voted were against the proposal.
  • At the WmMorrison AGM, just over 70% of shareholders voted against the remuneration report. The supermarket felt that exercising discretion was justified given the actions that it had taken during the pandemic and of course as consumers, we are all very grateful to the supermarket workers who kept us supplied with pasta and toilet rolls. However, whilst Wm Morrison’s actions were laudable, the decision to exercise discretion over bonuses was out of step with the wider sector.
  • It was a slightly different decision for us at the Whitbread AGM. We decided to support management, whilst a significant proportion of other shareholders chose not to. In this case, Whitbread, who had a very different challenge to AstraZeneca or Morrison during this period (hotels and eating places weren’t exactly open for business through a lot of this period) – decided to roll over the 2020/21 bonus to 2021/22 and set specific metrics around its payment. The company is not entirely off the hook – our view is that we will give it the benefit of the doubt and see what happens next year.

Covid-19: a valid reason or lingering excuse?

The clear message to companies was that we’re all bored of the excuse being given as Covid-19 – how often do you still hear that when you’re trying to get through to a call centre? It’s also not as simple as saying we didn’t accept furlough money and so on; companies cannot be seen by investors to be using this situation to ‘game’ the already complex remuneration frameworks.

For shareholders, the AGM season can sometimes feel ineffectual – significant votes against companies do not necessarily mean that the action is rescinded. However, the key elements are engagement, and showing boards that certain behaviours will be scrutinised and will not be tolerated.

To read more on the objectives and outcomes of our engagements and votes over the last quarter, you can view the full report.

Responsible investment

At Quilter Cheviot we see responsible investment as a process that analyses ESG data to help inform investment decisions and to ensure that all relevant factors are accounted for when assessing risk and return.

Find out more about Responsible investment


Gemma Woodward

Executive Director & Head of Responsible Investment

I lead the responsible investment team at Quilter Cheviot working to ensure that we act as stewards of our clients’ assets in order to protect and enhance their long-term returns. I am also a member of the central charity team working with charities to define and implement an investment strategy and asset allocation that meets the charity’s requirements. In my role as director of responsible investment, I work to ensure that we act as stewards of our clients’ assets in order to protect and enhance our clients’ long-term returns.

Greg Kearney

Senior Responsible Investment Analyst

Greg's role is to ensure Quilter Cheviot act as stewards of our clients’ assets in order to protect and enhance long-term returns. A significant part of his work is engaging with companies and funds to better understand how they assess environmental, social and governance risks.

Nicholas Omale

Responsible Investment Analyst

In my role as Responsible Investment Analyst, I assist with thematic research and thought leadership, manage the reporting on voting and engagement and develop dashboards for environmental, social and governance (ESG) research integration.

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