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This Market Tracker trend report examines the unique set of challenges and opportunities faced by public companies in the 2022 AGM season. It looks at the impact of environmental, social and governance (ESG) issues on stakeholder and shareholder engagement, focusing on how these matters influenced investor voting patterns during the 2021 AGM season, and anticipates the topics companies can expect to be at the top of the agenda in 2022. The report also examines alternatives to the traditional physical general meeting. It reviews how companies have approached the concept of hybrid meetings and provides a summary of best practice recommendations for companies seeking guidance and clarification on the rapidly evolving regulatory framework underpinning this area.

What are the highlights from the report?

• a summary of shareholder voting patterns during the 2021 AGM season
• an examination of the resolutions most likely to attract investor dissent
• a breakdown of FTSE 350 voting by industry sector
• analysis of recent amendments to company articles of association to accommodate hybrid meetings
• a review of the issues likely to be a key focus for stakeholders in 2022, including climate change, executive remuneration and board diversity
• example ‘best practice’ shareholder engagement extracts from recent FTSE 100 and FTSE 250 annual reports and statements responding to investor dissent
• a summary of key legal and regulatory developments expected to impact both the calling and holding of AGMs and the disclosures made in company annual reports
• a focus on electronic meetings, with expert practitioner insight and practical guidance for companies

Findings from the 2021 season

• 2021 saw 6.1% of companies experiencing one or more failed resolutions, a sustained increase on previous years (2020: 3.5%, 2019: 2.8%)
• a total of 156 resolutions received significant levels of opposition at 81 AGMs. Of these, 129 resolutions passed, albeit with significant levels of shareholder opposition (at least 20% of votes cast against) —a 22% and 8% increase on the 2020 and 2019 AGM seasons respectively
• the election and/or re-election of directors proved the most contentious resolution type during the 2021 AGM season, forming 35% of all resolutions receiving significant levels of opposition
• 64% of companies in the Travel, Hospitality, Leisure & Tourism sector received at least one significant no vote that nevertheless passed
• there were eight withdrawn resolutions during the 2021 AGM season from seven companies — a significant decrease on the 2020 AGM season, which saw 60 resolutions withdrawn by 50 companies, mainly relating to the cancellation of dividend payments
• of the FTSE 350 companies receiving at least one resolution with significant levels of opposition, the vast majority (94%) provided a statement in their voting results acknowledging investor dissent, but only 77% subsequently published an update statement
• of the companies analysed, 93 (33%) put forward resolutions on changes to their articles of association. Of these, 92% included changes to allow for the calling and holding of effective hybrid meetings

Market commentary

The report contains expert commentary and practical tips from:

• Richard Preston, Managing Associate, Addleshaw Goddard
• Will Chalk, Partner, Ashurst
• Gareth Sykes, UK Head of Corporate Governance Advisory, Herbert Smith Freehills
• Luke Hildyard, Executive Director, High Pay Centre
• Wilma Rix, Senior Associate, Linklaters
• Kate Mellor, Associate Director, Osborne Clarke
• Tom Proverbs-Garbett, Senior Associate, Pinsent Masons
• Andrew Gillen, Head of Corporate M&A and ECM, Travers Smith