AGM Alert 2019 guide published

We have published our AGM Alert 2019 guide for company secretaries and GCs of UK premium-listed companies preparing for their 2019 AGM and this year’s annual report.

Key issues of investor focus in 2019 are likely to include:
 
  • appropriate levels of pay for both executives and the wider workforce
  • individual director accountability
  • stakeholder engagement
  • auditor independence and effectiveness
  • long-term business sustainability and risks
  • impacts of Brexit

These concerns are in line with recent governance reforms. Many companies are already thinking ahead to the impact of the new binding reporting obligations and fully rewritten UK Corporate Governance Code, published last summer. Listed companies will need to start to report against these from 2020 onwards.

See below for a summary of key points in the AGM Alert 2019. To access the full guide, please visit our Linklaters Knowledge Portal.
 
Please note: The Knowledge Portal is an online subscription service, available exclusively to our clients.

Shareholder and stakeholder engagement
 
  • The UK Corporate Governance Code recommendations on how companies should respond to significant investor opposition have been strengthened. The FRC expects companies to comply this year, if AGM resolutions are voted against by 20% or more of investors. Affected companies will need to explain the action they intend to take, with their AGM results and in follow-up statements.
  • Companies should consider if they need to do more to engage with their stakeholders and the workforce as they will need to report on this next year.
  • Also, as new statutory rules for reporting on stakeholders and governance will apply separately to subsidiaries, legal and company secretarial teams should start to consider which group entities will be caught and whether existing subsidiary governance arrangements are effective.
AGM business
  • The Investment Association and Pre-Emption Group have emphasised that companies should keep to the accepted overall 10% limit when issuing shares without pre-emption rights.
  • More director election resolutions are being voted against by investors. This is more common in smaller companies, but all companies should give meaningful information about individual director contributions.
  • Amendments to articles are not required this year, but companies may want to consider updates to facilitate company administration.
Directors’ remuneration
  • The focus on whether directors’ pay is appropriate and fair continues this year.
  • New rules mean companies putting a new policy to a shareholder vote in 2019 must disclose how share price appreciation may impact on what directors could receive.
  • Investors are also asking companies to pre-comply with certain governance reforms, in particular, by this year publishing their CEO to average UK worker pay ratio.
Company reporting
  • This year, the FRC would like companies to pay particular attention to their disclosures on Brexit planning and preparation and on business continuity issues.
  • In addition, while companies do not yet need to make new corporate governance disclosures, they should be thinking ahead to how they will fulfil the new recommendations.