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Shareholders may have been physically absent from WM Morrison’s held on 11 June 2020, but their voices were heard when 34.83% voted against the proposed director’s’ remuneration policy. Despite the board’s statement that they had engaged with several major shareholders as part of the renewal process, it is likely that this significant opposition can be attributed to the pension contributions of 24% of base salary to chief executive, David Pott and chief operating officer, Trevor Strain.

The result may have been influenced by input from the Investment Association (IA) and investor advisory group, ISS. The IA have stated that ‘companies with existing directors who are paid more than 25% of salary as a pension contribution will be given a ‘red top’’. This means that the two executive directors have just made the cut. In addition, Provision 38 of the UK Corporate Governance Code 2018 (UKCG Code 2018) states that ‘the pension contribution rates for executive directors, or payments in lieu, should be aligned with those available to the workforce,’ which certainly isn’t the case for Pott and Strain, with the shopworkers on a 5% pension supplement of their base salary.

The company last experienced high levels of opposition in relation to remuneration at its 2017 AGM, when its remuneration report received a 48.11% significant no vote. This was later acknowledged in its 2017/18 Annual Report by chair, Andrew Higginson, who stated that the board did ‘not expressly state, in accordance with the Code, the actions [Morrisons] intended to take to understand the reasons behind the vote result’.

The AGM result in 2017 was followed by the appointment of Tony van Kralingen as chair of the remuneration committee, who led an engagement with shareholders to understand the reasons behind the significant no vote. The remuneration report received increasing support in votes at the subsequent AGMs (with 97.21% of votes in favour at the 2020 AGM). However, in March 2020, van Kralingen resigned alongside fellow non-executive director, Neil Davidson, a move rumoured to have been the result of disagreements over pay, pensions and corporate governance.

The 2017 AGM was also the last time that Morrisons shareholders saw the remuneration policy put to the vote. At a time when Pott and Strain received a pension supplement of 25% and 24% of their base salary respectively, this resolution passed comfortably with 92.35% of votes. Since then, amendments to the UKCG Code 2018 and the IA deadline to align director’s’ pensions to that of the workforce by 2022 have had an impact on shareholder sentiment. Fast forward three years and despite a drop of 1% to Pott’s pension contribution, this is now a point of contention.

Morrison stated in its 2020 AGM results announcement that, whilst ‘delighted’ by the 97.21% votes in favour of the director’s' remuneration report, it ‘notes the number of votes opposing’ the director’s’ remuneration policy. The FTSE 100 company now has six months from the date of the AGM to submit its plans addressing this year’s significant no vote against the remuneration policy to the IA public register.