What’s the Story?

Last week Georgeson, part of the computer share Group issued its 2025 European AGM season review covering nine major Western European countries.

As in past years, the AGMs on the remuneration report and remuneration policy continue to be prime sources of institutional shareholder dissatisfaction. Georgeson define a contested resolution as one which receives at least 10% opposition.

Contested resolutions on the remuneration of executive directors overall were 23.6% in the year ended 30 June 2025 (21.6% 2024). This is approaching the 1 in 4 level.

In the UK the FTSE hundred contested resolutions reached 12.1% up from 7% in the prior year (a 73% rise). Over the same period, this group of companies also saw contested votes on remuneration policies rise markedly to 21.6% up from 12.1% in 2024 (a 78% increase).

For context, ISS issued negative recommendations on 18% of remuneration reports in 2025 across the nine markets, a mild drop from the 19.4% for 2024. Glass Lewis issued negative recommendations on 22.4% of remuneration reports for 2025 a slight drop on the 23.8% seen in 2024.

Separately, on remuneration policy votes, 2025 saw ISS issue negative recommendations in 28.0% of cases, a marked rise over the 17.2% observed in 2024. The equivalent numbers for glass Lewis against recommendations were 23.1% for 2025 an uptick on the 19.9% in 2024.

The Georgeson USA season review excerpt shows Say-on-Pay votes enjoying 91.4% in favour for 2025 almost exactly the same as the 2024 91.3% figure (for R3,000 companies).

Why Does it Matter?

Directors’ remuneration matters strongly to institutional shareholders. This is because shareholders understand fully the importance of retaining and engaging top talent in the business framework of delivering shareholder value. They are concerned too with soft pay judgements and wider pay differentials and societal concerns.

But that said, investors look very closely both at the level of executive compensation, it’s mix between fixed and incentives, the short and long-term balance and the role of equity reward in the context of the selected vesting performance metrics, targets and linked pay out curve. So quite a lot then.

A modern top executive pay package is a complex set of moving parts. These are judged by the remuneration committee. As part of the board, they should be aligned strongly to the business model framed to deliver both short term and long-term success set in the company’s risk and cultural context.

The fact that so many shareholders still feel uncomfortable with a significant number of pay proposals shows either that the decisions made are too vanilla - they are seen as not tailored to the business needs strongly enough. Or instead that the explanation of how pay supports the business needs fully is poor or lacking.

Newspoint view

Executive compensation is complex because the nature of large businesses with strong growth aims is complex too.

It is highly desirable to keep things simple, but oversimplification will miss the point.

 As Albert Einstein famously said in a 1933 lecture:

“Everything should be made as simple as possible - but no simpler.”

Carrying strong institutional investor support for executive compensation arrangements is tricky. It needs two things at once:

• Well-designed pay and incentive arrangements,

• Clear shareholder communication.

Disclosure obligations are extensive but can cause communication haziness.

Cutting to the chase is needed to explain top pay clearly, as is ongoing shareholder dialogue. That is not easy, but it is essential.

Executive Compensation and Incentive Design

Please feel free to email or call:

Damian Carnell - [email protected] +44 (0) 7989 337118

VA Bec Bostock - [email protected]

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