2013 AGM season so far

2013 AGM season so far: “shareholder spring” agai...

The remuneration team at KPMG in the UK has analysed shareholder voting at Annual General Meetings up to 31 May this year.

Also on KPMG.com

press release

Shareholder opposition to pay proposals halves among FTSE 100s but doubles among small caps, according to KPMG analysis. Larger companies more likely to be early adopters of new practices on pay reporting, research shows. As predicted last year, the number of new long term incentive plans being proposed has dramatically increased and this trend is expected to continue. 

Half way through the AGM season, indications are that the ‘shareholder spring’ has re-emerged among small cap companies but dissent on pay has reduced significantly among larger listed companies. 

The remuneration team at KPMG in the UK has analysed shareholder voting at Annual General Meetings up to 31 May this year. Using votes against the remuneration report of over 20% or votes against plus abstentions from voting of over 20% as the hallmark of significant shareholder dissent, they found that it was among the smallcaps where the highest levels of dissent were observed with one in five companies experiencing major objections to their pay plans, up from 9% last year.  By contrast, among FTSE 100 companies, levels of shareholder dissent had halved.


  % of FTSE-All Share % FTSE 100 % FTSE 250 % FTSE SmallCap
  2013 2012 2013 2012 2013 2012 2013 2012
Percentage of companies with votes against Rem Report in excess of 20% 11% 7% 3% 6% 11% 10% 20% 9%
Percentage of companies with votes against and abstain in excess of 20% 13% 11% 5% 10% 14% 8% 20% 13%

David Ellis, head of reward at KPMG in the UK, said: “With over half of the voting season done, it seems fair to say that we’ve seen something of a resurgence of the ‘shareholder spring’ amongst the small caps but a marked decline in dissent on pay at the larger end of the market. Where we have seen shareholders objecting, it’s been similar to last year in that the dissent relates to specific circumstances and issues.  

These are usually not solely pay related, but instead driven by a combination of dissatisfaction around corporate performance and the leadership of the business.” In KPMG’s view, the contrast between the reduction in shareholder dissent on pay at the larger end of the market and its increase in the smaller end, is likely to be a result of the efforts made by larger companies to improve their practices, procedures and communications on their pay policies.

David Ellis continued: “The smallcaps have some catching up to do with their larger listed peers. Bigger companies tend to spend more time and resources on shareholder communications. Additionally our research suggests that it is the larger end of the market that are the ‘early adopters’ of new BIS ‘two reports’ format on pay which will become mandatory next year.”

The new BIS regulations coming into force next year will oblige companies to produce two reports on pay.  One is a policy report which will require companies to set out their remuneration policy for the next three years for shareholder approval in what will be a binding vote, in contrast to today where the vote is advisory only.

The second report is on the company’s implementation of existing remuneration practices and is backwards looking. Here the vote remains advisory. According to KPMG’s research, adoption of this new format is generally higher among the larger end of the market as illustrated in the figures below. As the new format comprises a number of separate requirements, the data below is an aggregation of the main elements.

These are: 

  • The two report format, which splits the report into a policy and an implementation report
  • The table of the elements of pay, which sets out each element of remuneration, its purpose and link to strategy
  • The scenarios graphs, which set out what each executive director would receive in the event of “minimum performance”, performance in line with budget/plan, and outperformance
  • The single figure of total remuneration, which sets out the total aggregate remuneration received by each director during the past year.


FTSE Constituent

Percentage of companies adopting the main elements of the new reporting format

FTSE All Share


FTSE 100


FTSE 250


FTSE Small Cap


David Ellis commented: “The figures show clearly that it is generally the larger companies that are the early adopters of the new practices on pay reporting “.

KPMG’s results suggest that it is the small caps that have the most to do in terms of getting ready for next year’s new rules.  David Ellis remarked: “We have seen a steady increase in enquiries from small caps asking for help in preparing for the new ‘two reports’ format.    

Particular challenges they face are: 

Clearly linking the elements of pay to strategy

  • Formulating a policy that shareholders will approve but gives the Remuneration Committee sufficient flexibility and the ability to exercise discretion when needed; and Producing the required information in the prescribed format.”  
  • Long-term incentive plans  
  • Last year KPMG predicted a significant increase in the number of long-term incentive plans proposed across all segments of the market as a result of the fact that many of the existing plans were approved nearly ten years ago and therefore must be replaced.  

This prediction has been borne out with the percentage of companies across the market proposing new or amended share plans more than doubling from 7 percent in 2012 to 15 percent this year. 

Long-term incentive plans are often an area of contention between companies and their shareholders and this is reflected in this year’s voting results.  Again the data indicates that there is more dissent on pay at the smaller end of the market with the percentage of smaller companies facing votes against share plans exceeding 20 percent being over four times that observed in the FTSE 100.



% of FTSE-All Share

% FTSE 100

% FTSE250

% FTSE SmallCap

Average vote against share plan





Percentage of companies with votes against share plans exceeding 20%






David Ellis: “Last year we said that reports of a widespread shareholder spring were exaggerated and what we were actually seeing was a small number of cases where shareholders focused their attention.  

With the exception of the smallcaps, we are seeing the same again this year and we expect it to continue into next. Companies now face a triple challenge: Shareholders being more willing to challenge poor remuneration practices and corporate underperformance in what remains a challenging economic environment.  

The need to replace a large number of long-term incentive plans in the next few years.

The requirement to adopt BIS’s new remuneration reporting requirements by next year. “These factors mean that the focus on remuneration will continue.” 


- ENDS -


For further information please contact:  

Margot Cowhig,

KPMG Corporate Communications

T: 0207 694 4246

M: 07920 274856:

M: margot.cowhig@kpmg.co.uk  

KPMG Press Office: 0207 694 8773 

Notes to editors. 

KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  KPMG International provides no client services.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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