The strong culture of
engagement between issuers and shareholders in Europe proved to be a defining theme of the 2016 proxy season. The most striking developments during the season demonstrate the dichotomy between the progress made through engagement to date and the need for even more engagement.
On the one hand, boards made significant progress in terms of transparency and responsiveness to minority shareholders. Among other examples, Italy saw an increase in minority shareholder participation in board elections, some Swedish companies bowed to shareholder pressure to allow individual votes to be case on directors, and companies across the continent improved reporting and engagement on ESG risk.
On the other hand, several cases point to the need for more engagement. These include some very public spats between issuers and shareholders in Germany, Italy, Switzerland and the Netherlands. While shareholder support for management proposals remained very high in Europe, there were a few sharp rebukes of management pay, particularly in France. Finally, there still appears to be significant dissent from shareholders on related party transactions.
Out of the thousands of AGMs we covered during the season, we’ve selected a handful of case studies that illustrate the issues that issuers and shareholders faced in Europe during the 2016 season, including:
- RWE AG—poor justification for an ineffective board structure.
- Snam S.p.A.–balancing minority shareholder representation on boards in the voto di lista
- NH Hotel Group S.A.–concerns about related party transactions leading to a board overhaul.
- Swedbank AB—too little too late to appease shareholder concerns on a CEO’s departure.
- Renault—failure to adequately respond to a shareholder vote against pay.
- Deutsche Bank AG—lack of effort to assess shareholder views on pay.
- Telecom Italia S.p.A.–excessive contractual awards still problematic in Italy, despite shareholder opposition.
- Koninklijke Ahold N.V.–shareholder engagement on pay resulting in a change of heart.
- Merlin Properties S.A.–poor response to shareholder concerns on pay.
- Credit Suisse Group—investors’ relatively tepid approach to binding pay proposals tested.
- Statoil ASA—a nuanced approach to climate change shareholder proposals.
- Volkswagen AG—poor governance contributing to huge problems.
- Delta Lloyd Group N.V.–effectively addressing dissenting minority shareholders.
- Sika AG — how not to treat minority shareholders.
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The Glass Lewis research team has been busy engaging with a broad range of companies following the 2016 season and in anticipation of the 2017 season. If you are an issuer and would like to engage with our analysts, please send us an invitation from the Issuer section of our website.
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Glass Lewis’ season reviews provide market-specific overviews of the key developments in governance, shareholder activism and stewardship, executive compensation and ESG that defined the 2016 proxy season, along with in-depth case studies detailing how these issues played out in practice.