Bruce Wallace Associates London
Bruce Wallace Associates London


March 2020

12 March, 2020

A large number of remuneration committees and boards of listed companies will be reviewing and updating the directors’ remuneration policy for shareholder approval at this year’s AGM.

Here is a summary of the recently issued voting policy guidelines for 2020 from the proxy voting advisory services, Glass Lewis and Institutional Shareholder Services (‘ISS’), as well as the key changes to the Investment Association’s (‘IA’) Principles of Remuneration for 2020. The points noted below relate primarily to remuneration and pension matters, however there are some broader points around diversity, independence, chair tenure that are not included here.

Institutional Shareholder Services

ISS updated guidelines will be effective for meetings from 1 February 2020.The main remuneration changes to the 2019 ISS Guidelines are:

  • Annual bonus targets – Detailed targets for financial and non-financial objectives should be disclosed preferably with a full target range (e.g. threshold, target and maximum) set out.ISS expects disclosure of sensitive targets to be provided no more than one year after the end of the relevant performance year immediately following the reporting year.
  • Remuneration and ESG factors – The remuneration committee should disclose how it as taken into account any relevant environmental, social and governance (ESG) matters when determining remuneration outcomes.This may include workplace fatalities and injuries, significant environmental incidents, large fines or sanctions from regulatory bodies and/or significant adverse legal judgements or settlements.
  • Pension contribution rates – Rates for new executive directors should be aligned with those of the wider workforce, and companies should disclose whether or not this is the case.For incumbent directors, companies should seek to align the contribution rates with the workforce over time.

The Investment Association

The IA published its revised guidelines on 1 November 2019, the key changes for which include:

  • Alternative remuneration structures – The IA has indicated that there are concerns over the operation of traditional long term incentive plans and that committees should review remuneration structures pointing out that a report by the Purposeful Company has shown investors are more willing to consider other structures such as restricted stock plans as long as these are linked to strategic outcomes.
  • Discretion on vesting outcomes – The 2020 Principles contain a recommendation that incentive schemes have a discretion for remuneration committees to limit vesting outcomes if a specified monetary value is exceeded.
  • Pensions – Pension contribution rates for executive directors should be aligned with the majority of the workforce and a plan should be in place to reduce contribution of existing directors to this level by the end of 2022.
  • Shareholding and post-employment shareholding requirements – Post employment shareholding requirements should be introduced in all new remuneration policies put to shareholders.
  • Remuneration levels – The IA continues to be concerned about excessive levels of remuneration for directors and remuneration committees are urged to use constraint when increasing fixed and variable pay.
  • Pay for performance – Reporting on financial, strategic and personal targets for performance pay should be robust and transparent so that the link between pay and performance is clear.Strategic and personal targets and outcomes should be disclosed separately.

Glass Lewis

The key changes for the 2020 voting season are:

  • Salaries and pensions – Salary increases, and pension contribution levels should reflect those awarded to the wider workforce.
  • Incentive plans – Awards for incentive plans should be subject to clear and transparent limits ideally expressed as a multiple of base salary.
  • Post-employment shareholding requirements – These are expected as best practice features of remuneration policies
  • Remuneration Committee discretion – Remuneration committees should consider using downward discretion where there has been an exceptional negative event (including a sharp decline in share price) even if targets have been met.

GL will also review compliance with the Investment Association’s Principles of Remuneration when considering voting recommendations.

If you need more information please contact us at

February 2020

26 February, 2020

October 2019

1 October, 2019


As the reporting season approaches it is worth a reminder of the new requirements on workforce and employee reporting.Implementation of any reforms to address these new obligations may well be underway and it is important to ensure that the updated measures from the UK Corporate Governance Code 2018 as well as other corporate law and regulations are reported on appropriately.

Workforce engagement

The UK Corporate Governance 2018 Code (‘2018 Code’) states that the Board needs to understand the views of the company’s key stakeholders and report on how they have considered these in Board discussions and decision making.Engaging with the workforce can, as recommended by the Code, be achieved by having a director from the workforce; a workforce advisory panel; a designated non-executive director or combination of these.The Board Effectiveness Guidance 2018 explains that the overall aim is for meaningful and regular dialogue with the workforce.However, if the Board does not use one of these methods it should explain what alternative arrangements are in place and why.

Employee engagement

As our January blog noted, The Companies (Miscellaneous Reporting) Regulations 2018 (the ‘ 2018 Regulations’) which came into force from 1 January 2019 requires all companies with 250 UK employees or more to detail in their annual report how directors have engaged with employees and the effect of their regard for employee interests on principal decisions made by the company in the financial year.

Directors’ duties

The 2018 Regulations requires certain companies to report on how boards have had to regard to s172 of the 2006 Companies Act being to promote the success of the company, and in particular to give details in the strategic report of how directors have had regard to employee interests as well as how they have built relationships with other stakeholders.

Pay ratios

For quoted companies with more than 250 UK employees, there needs to be a pay ratios table in the upcoming report setting out the CEO:UK employees pay ratios, as well as explanations in the directors’ remuneration report.

Remuneration report

The 2018 Code states that the Remuneration Committee should review workforce remuneration and detail how this, along with other factors, have been considered when setting the policy for executive director remuneration.As many companies will be putting their remuneration policy for approval at the 2020 AGM there could be increased scrutiny in this area.New provisions about aligning pension contributions with the workforce will also need to be addressed.

There are different reporting requirements depending on the type of company and should you require any further guidance of which parts apply please contact Anne-Marie Palmer (; 07803 171 644) if you would like to discuss further.

August 2019

1 August, 2019


As the main AGM season draws to a close, it can be easy to assume that with the meeting completed and resolutions passed, that general meeting matters can be parked until next year.However under the 2018 UK Corporate Governance Code (the ‘Code’) it is now a requirement for companies that received 20 per cent or more votes cast against the Board recommendation for a resolution to report within 6 months of the meeting and in the following annual report on actions taken in response to the vote received.(Provision (4) Code)

In the voting results announcement issued after the AGM, companies that comply with the Code, should have made a statement about any resolution that received a significant vote against.It is now appropriate for the Board to consider next steps on investor engagement, in readiness to report initially on its activities in the 6-month update statement.

Investment Association Public Register

The Investment Association set up the Public Register to track shareholder dissent at listed companies and records companies within the FTSE All Share that had received significant votes against resolutions at general meetings.The register is updated periodically, and it is likely that if a company is on the Register, they can expect additional scrutiny on all resolutions the following year.

6-Month Update Statement

Companies are required to provide an update on the views received from shareholders and actions taken and publish this update on the website, within 6 months of the meeting. The Investment Association has put together some guidance on what they expect to see in the Update Statements, namely that Statements should be standalone, describe the engagement undertaken and what actions have been taken and what future actions are intended.

Whilst the Statement should provide a meaningful update, companies are required to provide a final summary of what feedback it received and the actions and taken within the next annual report, or if applicable in the explanatory notes to the resolutions for next year’s meeting.It is not expected that everything will have been completed within 6 months.

Next Steps

There are some common actions that companies can undertake in readiness for preparing their 6-month statement, whatever the subject matter of the resolution that received the votes against:

  • Undertake a share register analysis to seek to identify where the significant votes came from.Whilst it may be possible at an institutional level to classify the votes received, evaluating where these votes came from in terms of beneficial ownership, will help target any investor engagement and put the Board in a stronger position.
  • If any reports were issued by proxy voting advisors regarding the company prior to the AGM, then pinpointing any institutions that may have followed this guidance can help to explain the votes received against.
  • Undertake a programme of investor engagement to seek to tackle the reasons for voting against the resolutions as well as address any further areas of concern.
  • Report back on investor meetings to the Board to consider the issues raised and what actions, if any, are to be taken.

Please contact Anne-Marie Palmer (; 07803 171 644) if you would like to discuss further.

April 2019

4 April, 2019


As the 2019 AGM season is now underway, boards of directors should be briefed on the voting guidelines and principles recently published by proxy advisors and investment groups.These are followed by many investors and raise a number of new governance issues that may not have been formally reported on yet, as well as give updates on issues covered in previous years.

Investors and proxy advisors will be analysing reports and company announcements for statements and indicators of how companies are attempting to address these topics.Whilst the requirement to report against the 2018 UK Corporate Governance Code is not expected until next year, companies should be ready to respond either during results calls, in investor meetings or at the AGM itself on the company’s approach to a particular matter and any steps being taken in readiness for next year.AIM companies should also take appropriate note of the guidelines and principles published as they cover many of the topics that they will have been assessing recently following adoption of recognised governance code.

Whether the matters have not been formally disclosed or indeed are issues that have been addressed in the annual report but would benefit from further explanation, directors may want to be proactive in contacting investors to discuss these matters in advance of the AGM during the proxy voting season. This may assist in ensuring the smooth running of the AGM itself.

Bruce Wallace Associates can assist in preparing for your AGM, either in relation to governance matters or in terms of preparation and running of meetings.

Please contact Anne-Marie Palmer ( if you would like to receive further details on each of the guidelines and principles which have been published for the 2019 AGM season, including:

  • Institutional Shareholders Services (ISS) proxy guidelines for meetings held on or after 1 February 2019
  • Glass Lewis 2019 Proxy Voting Guidelines
  • Investment Association’s Principles of Remuneration 2019, including IVIS policy changes on gender diversity on boards and pension contributions for executive directors
  • Pension and Lifetime Savings Association (PLSA) Corporate Governance Policy and Voting Guidelines 2019.

Martha Bruce

Susan Wallace

Chloe Higgins

Adrienne Graham

Anne-Marie Palmer

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118 Pall Mall

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