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As the 2022 AGM season begins to draw to a close, there has been a recent uptick in dissent against executive pay. Over the course of two days (21–22 July 2022), three FTSE 350 companies, (Halma), (Homeserve) and (JD Sports), received significant no votes (at least 20% opposition) against their remuneration reports. Halma and Homeserve also saw investor revolts against the re-election of one of their directors, Jo Harlow and Tommy Breen respectively.

The differing responses of the three companies to the dissent is evident in their post-AGM disclosures. All three companies addressed their respective shareholder revolts immediately following their meetings and stated what actions they intended to take to consult shareholders in an effort to understand the reasons behind the revolts (for more information, see the ‘Provision 4’ section of Practice Note: ). Halma and Homeserve both discussed the dissent within their voting results, which is standard practice in the FTSE 350. However, JD Sports, in keeping with previous years, published a separate to address the opposition to its report.

Also of note is that the quality of the disclosures was not of the same standard between the three companies. For instance, much of JD Sports’ acknowledgement of the dissent was decidedly boilerplate, with the sports-fashion retailer trying to put a positive spin on the revolt by noting that the company had improved on the year before and reaffirming its commitment to engage with its shareholders in the future:

‘The Board recognises the lower levels of support for the resolution to approve the Remuneration Report (72.3%) but notes that this resolution has received more support than at the AGM in 2021 (68.5%). It is encouraging that many of the Company's shareholders have recognised the progress that is being made in this regard. The Board is committed to maintaining the dialogue with shareholders in order to understand any ongoing concerns they may have around executive remuneration. This process will be led by the new chair of the Remuneration Committee, Suzi Williams, who will meet with shareholders over the coming months to better understand their views ahead of a full remuneration policy review. The Board is committed to ensuring a rigorous and transparent remuneration approach which is fully aligned with both our stakeholders and best practice.’

In contrast, Halma’s and Homeserve’s disclosures generally provide more information, especially with regards to reasons as to why certain investors decided to cast their votes against. Homeserve’s explanation is particularly good in relation to this:

‘On Resolution 2 (the Remuneration Report), certain shareholders and proxy advisors expressed concerns about the increase in basic salary and LTIP opportunity for Tom Rusin, the Executive Director who leads HomeServe's fast-growing North American business. HomeServe received helpful and supportive feedback after it wrote to all major shareholders and the leading proxy advisers in December 2021, to explain the importance of Mr Rusin being appropriately incentivised as an exceptional leader in North America, where competition for talent has intensified. Mr Rusin's package was benchmarked against US companies of a comparable size to HomeServe's North American division, and while it is still below US market rates, it is now considered to be sufficiently competitive. HomeServe is committed to ensuring that its remuneration practices at all levels are fair and appropriate, and enable pay to be set at the level necessary to attract, incentivise and retain high-calibre talent.

 The increase to Mr Rusin's remuneration was agreed before HomeServe became subject to a potential takeover bid in March 2022 - a transaction which is due to complete in the fourth calendar quarter of 2022. If completion of this transaction were to be materially delayed, the Remuneration Committee would consider consulting further with shareholders to understand the reasons behind the voting result on Resolution 2.

On Resolution 4, (the re-election of the Chairman, Tommy Breen) the vote against was influenced by concern that HomeServe had not made sufficient progress on Board diversity. As disclosed in HomeServe's FY22 Annual Report, an offer was made to a female Non-Executive candidate in March 2022 but, given the takeover approach, it was agreed that it was not appropriate to make the appointment as planned. If this candidate had been appointed, HomeServe would have met the targets set out in the FTSE Women Leaders Review and the Parker Review. Should completion of the takeover be materially delayed, HomeServe will continue to take steps to improve the diversity of its Board.’

It is also worth noting that Halma disclosed that the dissent against its director Harlow was due to her role as the company’s Remuneration Committee chair. This supports the increasing trend in recent years of committee chairs, especially those of the Remuneration Committee, being held responsible by investors through the ballot box for their apparent failures in their areas of remit. For more information on investor best practice in relation to Remuneration Committee chairs, see Practice Notes: and .

According to Market Tracker data, these three significant no votes against remuneration reports bring the total up to 27 so far during the 2022 AGM season, with three of them failing to receive the majority support required to pass. The average level of dissent for the 27 reports is currently 34.9%.

For more information on shareholder dissent during the 2022 AGM season, see our recently published Trend Report: .