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2024 United Kingdom Proxy Review

Below are key takeaways from ISS’ recently released 2024 Proxy Review: United Kingdom.

The full report is available to institutional subscribers by logging into ProxyExchange then selecting the Knowledge Center and its Library tab and to corporate subscribers by logging into Compass then selecting Governance and the Governance Library or Governance Exchange tab.

  • Remuneration: In 2024, new remuneration policies featuring board-level US-inspired ‘hybrid’ schemes, featuring a combination of both performance-based and time-based ‘restricted’ share awards, proposed at UK companies. The response of shareholders to the hybrid plans has been mixed, with resolutions seeking the approval of such plans experiencing some of the highest levels of dissent recorded for proxy season. However, despite such hybrid schemes, overall dissent in relation to executive pay has generally declined compared to previous proxy seasons.
  • Other dissent: Remuneration aside, other resolutions receiving the highest levels of dissent included director re-election, share issuance authorities and Rule 9 waivers. Reasons for opposition to director re-elections included board independence, board diversity, and remuneration.
  • Board diversity: There was a general uptick in the number of FTSE 350 companies meeting the primary board diversity targets outlined in the Listing Rules, with 62% of the FTSE 100 and 38% of the FTSE 250 meeting all three targets.
  • Climate: The number of companies incorporating ESG metrics into their short-term incentives (STIs) continued to grow at a faster pace than long-term incentives (LTIs)
  • Regulatory: The FRC’s UK Corporate Governance Code and FCA’s Listing Rules were updated in 2024, with various ramifications for UK market practice. The Quoted Companies Alliance (QCA) also updated its Code in late 2023, which is likely to lead to an increase in the number of resolutions tabled by FTSE AIM companies from 2025. Finally, in October 2024, the Investment Association (IA) updated its Principles of Remuneration, which may have ramifications for remuneration policies put forward during future proxy seasons.

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Authored By

Tom Inchley, Lea Ramsler & Chris Osborne

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