Most Significant Votes (w/e 20th December 2024)

Welcome back to Most Significant Votes for the last time this year! We are wrapping up the Southern Hemisphere voting season, and a handful of meetings from elsewhere in the world. As always, we focus on the key AGM decisions that matter to asset owners and on which they might wish to hold their fund managers accountable, as selected and discussed by Paul Lee Redington’s Head of Stewardship & Sustainable Investment Strategy.

The main focus of recent attention has been on Australia’s banks. Most dramatic was ANZ (AGM 19th December), which has been dealing for more than half the year with a series of conduct issues in its markets division, most significantly allegations of market manipulation around a bond issue the bank managed on behalf of the Australian Office of Financial Management. Significant numbers of shareholders were clearly not persuaded by the board’s protestations that so far no wrongdoing has been found and that if they were there are sufficient deferred elements of executive pay to ensure that there could be clawback of reward if needed: the resolution to approve an incentive award to CEO Shayne Elliott was withdrawn on the morning of the meeting.

Chair Paul O’Sullivan said: “We received majority support from shareholders to grant our CEO his long-term variable remuneration, however a substantial proportion of shareholders voted against the resolution.” Because it’s required by law, the board could not withdraw the remuneration report vote, which witnessed 38% opposition, amounting to a significant ‘first strike’ on pay. This places additional pressure on the company over the next year.

In addition, ANZ, and also Westpac (AGM 13th December) and National Australia Bank (AGM 18th December), faced shareholder resolutions challenging them to rein in their financing for new fossil fuel projects and explain how any transition plans from such borrowers will be assessed to be credible or not. Campaigners point out that the banks continue to finance fossil fuel projects in spite of their declared support for the ambitions of the Paris Agreement. At Westpac, the outcome was particularly striking: 37% of shareholders refused to support the board’s rejection of the proposal. At ANZ, the support was 28%, and at NAB a still impressive 19% backed the shareholder resolution (including 4% who abstained).

Elsewhere in the sector, Bank of Queensland (AGM 3rd December) had a quieter time of things. Not only was there no shareholder proposal at its meeting, its remuneration report vote passed with only 7% opposition, significantly below the 25% threshold that would have triggered a spill vote to potentially oust the whole board (the bank had faced a ‘first strike’ vote against above that threshold last year).

US tech giant Microsoft (AGM 10th December) also faced a series of shareholder resolutions. Three of the six were in relation to artificial intelligence. The most popular of these was one raising concerns about the ethics of data sourcing for the training of AI, and the associated risks for the company. This garnered 39% support, even though it was put forward by the National Legal and Policy Center, whose resolutions many investors are wary of because they are often perceived to be ‘anti-ESG’.

A second AI proposal, on the risks of misinformation and disinformation, won 20% support, while the third, raising questions about the potential use of AI to support the oil and gas industry, was less popular, winning 11% backing. The other two resolutions of note were more specifically on human rights issues, with one flagging concerns about siting data centres in regions facing human rights abuses (Saudi Arabia was highlighted in the resolution) gaining 33% support; while one identifying risks related to possible involvement in developing weapons garnered 16% backing.

At the UK’s Primark to sugar beet conglomerate AB Foods (AGM 6th December) pay was the main concern for shareholders. The reported 4% opposition to the remuneration report vote sounds limited – and seems to reflect the ￡6 million paid to CEO George Weston, a 50% hike on last year and nearly 3 times the payout in 2002 (though these increases reflect changes in the incentive payouts and so are closely associated with improvements to the company’s performance).

Weston’s reward amounts to some 218 times the median pay at the company. But the level of opposition looks more like 14% once the 61% shareholding of the Weston family is set to one side, a rather larger rebuke.

Denmark’s Coloplast (AGM 5th December) also faced investor concerns on pay. 9% of shareholders at the medical devices company opposed the remuneration report vote – but this is 18% of those other than the founding family, who enjoy 10 times voting rights on their A shares. Lars Rasmussen has been Coloplast’s chair for six years, but was in executive management from 2001-2018, the last decade of which as president and CEO. Many shareholders clearly don’t see him as independent: 6% (or 13%) declined to support his re-election, all of them abstaining.

Fallen darling of the pandemic lockdown, interactive exercise bike firm Peloton (AGM 3rd December), continues to have disagreements with many of its shareholders as it struggles to navigate the new reality for its business model. Chair Jay Hoag, closely associated with major venture backer TCV, was the sole director up for election. His re-election with only 12% opposition doesn’t seem too negative, but once TCV’s 20 times voting shares are excluded from the calculation, the 31% opposition from other shareholders makes this seem like less of an endorsement. Similarly, the headline 18% opposition to executive pay looks more like 44% when TCV’s artificially enhanced votes are set to one side. This seems to be related to remarkably generous treatment of two of the leading executives who departed during the year.

Otherwise, the major action was in South Africa, and mostly concerned long-standing directors. 30% of shareholders at Aspen Pharma (AGM 5th December) voted against the re-election of Chris Mortimer. Mortimer has been a director since 1999 but is admitted to be non-independent for the less disputable reason that the law firm of which he is a partner provides occasional advice to the company.

Similarly, many investors believe that the board of Remgro (AGM 28th November), an investment vehicle associated with the Rupert family (perhaps best known for their control of Swiss luxury goods conglomerate Richemont), is overdue renewal. Four of the 14 directors are acknowledged to be non-independent for links to the family and there are question-marks around a further four because of their long tenure. The longest serving, Fred Robinson, has been on the board for 23 years and faced a vote against from outside shareholders of at least 54%, though he was duly re-elected with the benefit of the Rupert family’s 10 times voting rights shares, gaining some 76% support overall. Josua Malherbe, one of the admitted non-independent directors, faced 12% opposition, or 24% from the non-Ruperts. The remuneration report was also unpopular, with 17% (or 35%) of investors opposing.

Similar thinking clearly influenced votes at miner Harmony Gold (AGM 27th November). Fully 37% of shareholders declined to support the re-election of lead independent director Mavuso Msimang, who has been a director since 2011. This looks more like 43% once the 12% of the votes controlled by billionaire chair Patrice Motsepe through his African Rainbow Minerals vehicle are set aside. The reappointments of fellow long-standing directors Vishnu Pillay and Karabo Nondumo were each opposed by around 25% of investors, or 28% other than Motsepe. But most striking were the votes against the appointment of two directors to the audit committee, particularly committee chair John Wetton (who has also been on the board for 13 years): 43% (or 49%) of shareholders declined to back his appointment.

The board at African Rainbow Minerals itself (AGM 6th December) proved even less popular with outside shareholders. Frank Abbott, who has been on the board for 20 years, the first five of them as finance director and who was also finance director of Harmony Gold for a further 8 years, and yet is still claimed to be an independent director, fared worst: the headline 26% opposition to the resolutions reappointing him as both a director and to the audit committee looks more like 51% opposition once the 46% of the votes wielded by Motsepe are excluded. Audit committee chair Tom Boardman, who has been a director since 2011 and appears very busy, was only marginally better off. The vote on his reappointment to the audit committee witnessed 24% votes against, or 48% of those other than Motsepe.

That’s it for this issue and for this year. Seasons greetings to all who celebrate. We’ll return with Most Significant Votes in April for the Northern Hemisphere voting season.

Interested in leveraging these insights and others to hold your investment managers to account more effectively? We'd love to discuss how. Get in touch