Eight repeat offenders on pay but progress on audit, shows NAPF 2014 AGM report | PLSA
Eight repeat offenders on pay but progress on audit, shows NAPF 2014 AGM report

Eight repeat offenders on pay but progress on audit, shows NAPF 2014 AGM report

16 September 2014

The National Association of Pension Funds (NAPF) today (Tuesday) published its second Annual General Meeting (AGM) Season Report. The NAPF represents the interests of its pension fund members as investors and we believe high standards of corporate governance lead to better run, more stable and more valuable companies, creating better outcomes for pension funds and their scheme members. 

Recent regulatory change in the areas of remuneration and audit means these were the topics of recurring interest in the past AGM season, and consequently are prominent in our report this year. 


With year-on-year dissent down the new disclosure requirements have not brought about a second “shareholder spring”, but this should not be viewed as a sign of failure. The aim was to create more dialogue, and there has certainly been more of that. The overall downward trend masks a number of flash points at high profile companies and a significant variation in the voting approaches adopted by different asset managers.

The NAPF looked in particular at those companies which received successive years of dissent on remuneration (defined as more than 20% dissent in 2013 and more than 15% dissent again this year).  Last year 28 companies in the FTSE100 and FTSE250 were subject to significant investor concern on this issue.  By mid-August eight of these companies had received further criticism from their investors with respect to either their policy or its implementation. These are listed in the table below.

  • Capital & Counties Properties             
  • easyJet                                                
  • FirstGroup                                            
  • Lonmin
  • Mitie Group
  • Ocado Group
  • Ophir Energy
  • SVG Capital

The NAPF’s report also comments on the “top 10” shareholder rebellions on remuneration in this year’s AGM season. Companies highlighted include:

  • Kentz Corporation which became the first company to lose the binding vote on pay;
  • Burberry which received the highest vote against in the FTSE 100; and,
  • Standard Chartered which beat off stiff competition from Barclays to achieve the most dissent amongst the banks.

Will Pomroy, Corporate Governance Policy Lead, NAPF, said:

“To receive significant shareholder dissent on remuneration one year might be regarded as a misfortune, but to do so a second year really does not reflect well. We urge all those firms whose shareholders have so clearly signalled their dissatisfaction this year to begin in earnest a conversation to resolve the concerns well ahead of next year’s AGM season.”

The new regulations on remuneration reporting introduced this year saw the remuneration report being split into two sections: a policy report – subject to a binding vote every three years; and, a remuneration report – subject to an annual advisory vote. Different fund managers took different approaches to the two separate votes, with some more likely to vote against one form of resolution, while others took a stronger stance on the other form.

Will Pomroy, added:

“While it is important to understand what and how a director is being paid, it is equally important to understand why that is appropriate. The intention behind the new reporting requirements is to explain this ‘why’ and encourage fruitful dialogue between companies and their shareholders about what delivers sustainable performance. 

“We are glad to see greater transparency and hope more companies next year use their reporting to communicate better with their investors, as opposed to simply complying with the regulations. Since the publication of our Remuneration Principles last year we are encouraged by many emerging trends. We look forward to seeing more companies reflect on how better to link pay arrangements to both their specific corporate circumstances and the interests of their long-term owners.”


This year’s audit reports were the first under the new regulation introduced to require auditors to provide more specific comment on the company – including the materiality level applied in the audit, the scope of the audit, and what risk areas were particularly focused on within audit work.

The NAPF’s 2014 AGM Season Report commends the work done by KPMG who this year has set a new benchmark in the standard of reporting expected of auditors; and it highlights the external audit report produced by KPMG for Rolls Royce as deserving particularly positive recognition.

Will Pomroy, commented:

“The enhanced auditor reporting requirements appear to have achieved the almost impossible task of keeping both investors and companies happy. The audit report is critical in allowing the auditor to communicate clearly with a company’s shareholders, who in effect are the end-client. 

“This was the first year under the new standard and KPMG’s work led the field this year.  We look forward to further improvements from them and the other audit firms next year to support a new and valuable conversation between auditors, audit committees and investors.”   

The NAPF’s 2014 AGM Season report will be launched at a NAPF Hot Topic Seminar on Tuesday 16 September – Being Responsible Owners, sponsored by First State Investments.  Speakers at the seminar include Sir Win Bischoff, Chairman FRC; Jeroen Hooijer, European Commission; and David Hertzell, Law Commission.

The NAPF’s 2014 AGM Season Report.

Notes to Editors:


The NAPF is the voice of workplace pensions in the UK. We speak for over 1,300 pension schemes that provide pensions for over 17 million people and have more than £900 billion of assets. We also have 400 members from businesses supporting the pensions sector.

We aim to help everyone get more out of their retirement savings. To do this we spread best practice among our members, challenge regulation where it adds more cost than benefit and promote policies that add value for savers.


Lucy Grubb, Head of Media and PR, NAPF, 020 7601 1726 or 07713 073023, [email protected]

Eleanor Bennett, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, [email protected]

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