³ÉÈËÓ°Òô

Against the Pensions & Investment Research Consultants Ltd’s (PIRC) recommendations, JD Wetherspoons’ shareholders showed overwhelming support in favour of re-electing chair Tim Martin in its held on 21 November.

Tim Martin has been executive chair of JD Wetherspoons since 1983, having founded the company in the 70s.  In accordance with the , the chair and non-executive directors of a company should not exceed 9 years in the role from the date of appointment to the board.  The reasoning behind this is that it would compromise the independence of these directors – something which Martin has openly opposed, claiming in the company’s that ‘by institutionalising inexperience, the code guarantees the eventual destruction of the culture or ‘DNA’ of successful companies’.

In line with the code, PIRC had recommended that shareholders vote against Tim Martin and the non-executive directors who had exceeded this limit. Despite this, Tim Martin was re-elected as director with a 98% majority. Whilst his two long standing non-executive directors were also re-elected, both Debra Van Gene and Sir Richard Beckett received over 19.4% dissenting votes in the independent poll. Both these directors also received over 30% significant no votes in the 2018 AGM, which Tim Martin addressed in the , stating he had communicated with the shareholder in question regarding this. He further pointed to the hypocrisy of these shareholders and PIRC in the 2019 quarterly report, highlighting how they themselves do not follow the 9-year rule they are imposing.

In response to Tim Martins criticisms, PIRC released a stating the issue of Tim Martin’s independence arises due to his role as executive chairman as well as being a major shareholder.  PIRC also accepted that the company and its shareholders may have contrarian views, and notes that there may be ‘limitations of the ways of looking at companies through a governance framework’. However, the shareholder advisory group remained firm in its stance against the company’s political expenditure. Section 365 of the Companies Act 2006 defines political expenditure as activities that are likely to ‘influence voters in relation to any national or regional referendum held under the law of a Member State’.  Such expenditure requires approval by shareholders in accordance with the Act. However, despite spending almost £95,000 on pro-Brexit beer mats, JD Wetherspoons did not seek shareholder approval or disclose this within the 2019 annual report.  As such, PIRC recommends that shareholders vote against the annual report claiming that ‘This is a question of law, not of judgment, or of contrarian views. All companies should comply with the law’.  Nevertheless, this resolution was passed with a 95.3% majority.

Although Tim Martin still received overwhelming support, there have been notable instances where, in line with the PIRC recommendations, this has not been the case. An example is Redrow plc’s 2019 AGM, held in early November. PIRC had recommended shareholders vote against chair John Tutte’s re-election as director, due to the belief that his prior chief executive position would compromise his independence. Although the resolution still passed on a majority, a significant 31.4% of shareholders opposed his re-election. The company stated that it will be in touch with shareholders regarding this result. 

Market Tracker notes that there has been increased opposition to the election and re-election of directors at AGMs, with these being the most commonly voted against resolutions in the 2019 AGM season. More information on voting at the AGM can be found in our AGM season 2019 Trend Report.