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On 22 September 2022, Liontrust Asset Management plc (Liontrust) another shareholder revolt against executive pay, with 46.5% of votes cast against its remuneration report at its 2022 annual meeting. This follows an earlier revolt during February 2022, when investors voted on a new remuneration policy and long-term incentive plan at a general meeting, which the asset manager use its short notice period right to call. Both resolutions barely managed to scrape through, with only 54.1% and 55.6% support respectively (for more information, see: Liontrust’s shareholders take issue with asset manager’s new FTSE 250-level pay).

The dissent adds to the asset manager’s tumultuous history with regards to remuneration, as the company continues in its attempt to bring the financial rewards of its executives up to the standards of the FTSE 250 following its promotion to the index on 22 June 2020 in the FTSE Russell’s Q2 FTSE 350 reshuffle. In Liontrust’s AGM results, it not only acknowledged the dissent against its remuneration report, but also noted that much of the opposition could be traced back to its earlier general meeting. According to the asset manager, the February 2022 remuneration policy still ‘divided opinion amongst [its] shareholders’. This is largely due to the significant in the salaries of the company’s chief executive and combined CFO/COO under the new policy, which grew to £550,000 and £420,000—increases of 58% and 28% respectively. Also controversial were the annual bonuses for the senior executives, which allowed bonuses of up to 450% and 350% of base salary respectively, although Liontrust’s Remuneration Committee noted that ‘the full payout will only be earned for exceptional holistic performance’.

Following its general meeting, Liontrust consulted with both investors and proxy advisers during the Summer, which subsequently led to a number of amendments being made to the policy, including ‘a hard cap on the annual bonus and the removal of the direct link to and funding from Adjusted Profit Before Tax’, among other things. However, this seems not to have placated some shareholders, given that almost half of votes were cast against Liontrust’s remuneration report. Following its 2022 AGM, the asset manager once again promised to engage with its shareholders:

‘The Company will engage with shareholders again to understand their continued disagreement with Liontrust's approach to Executive Director remuneration. The Company will determine whether any additional changes can be made to the remuneration structure over the next year and life of the new DRP [(remuneration policy)] whilst ensuring that the remuneration structure retains the key purpose of driving outstanding value creation and exceptional corporate performance over the short and long term.’

During the 2022 AGM season so far, there have been 30 FTSE 350 companies that have received significant no votes (at least 20% opposition) against their remuneration report. With only a few AGM results left to take place this season, this suggests a decline in dissent when compared to the 2021 AGM season, which saw 37 significant no votes against remuneration reports. Of the 30, three reports did not receive the required majority to pass (Informa plc, Future plc, and Plus500 Ltd). Of the 27 that passed, Liontrust’s report was the one that came the closest to failing with 46.5% opposition, followed closely by Greencore Group plc with 46.3%. The average level of opposition for FTSE 350 companies receiving significant no votes against their remuneration report was 34.5%, the median 32.6%. However, these were above the average and median for the 2021 AGM season, which were 33.0% and 30.8% respectively.

It should also be noted that Liontrust’s 2022 AGM saw 26.5% of votes cast against a resolution allowing the asset manager to call general meetings on not less than 14 clear days’ notice. As a special resolution, it therefore fell short of the 75% majority required to pass. In its voting results, Liontrust acknowledged that the resolution had not received the required support and noted that the dissent was likely due to its misuse in the calling of the February 2022 general meeting:

‘With regards to Resolution 19, the Board wishes to clarify that we used the short notice period to call the February 2022 General Meeting as our extensive shareholder consultation on the new DRP [(remuneration policy)] lasted longer than had been planned. In hindsight, our use of the authority was inappropriate. As noted in our 2022 Annual Report, we have committed not to use this authority in a similar manner in future.’

Liontrust’s annual report stated the following:

‘The [Remuneration] Committee acknowledges that the February GM was called with fourteen not twenty-one days’ notice which caused some disquiet and commits to this not happening again in the future. For the avoidance of doubt, any future general meetings in relation to remuneration will be called with 21 days’ notice.'

For more information on general meetings, see Practice Note: .

The 2022 AGM season has seen 14 resolutions fail to pass, five of them shareholder requisitioned resolutions. This is far less than the 2021 AGM season, which saw 27 failed resolutions, including nine at Petropavlovsk plc.

Like many asset managers, Liontrust has had an unfortunate year amid the ongoing geopolitical instability, the cost-of-living crisis and spiking market volatility. Since 31 December 2021, the company’s has fallen 61.9% from 2,061.98 pence per share to 786.00 pence per share as of 26 September 2022. This is despite the fact that Liontrust a 64% increase in adjusted profit before tax for FY 2021–22 compared to the year before. Moreover, its assets under management grew to £33.5bn, an 8.5% increase. This is at a time when many other asset managers are suffering from significant outflows of capital. For instance, see Abrdn plc in: FTSE 350 Q3 2022 reshuffle—Energy companies burn bright as Abrdn falls from FTSE 100.

Shareholders will have to wait for Liontrust to disclose its 2022 update statement for information on how the asset manager reacted to the latest shareholder revolt against its executive pay.

For more information on shareholder dissent during the 2022 AGM season, see Market Tracker’s recent Trend Report: . A full analysis of the 2022 AGM season is to be produced in due course.