Latest perspectives on the 2023 AGM season

As of 1st April 2023, there have been 61 companies in the FTSE 100 publishing their 2022 annual report and accounts, and over 30 have published a new policy for approval. Common areas of attention have concerned: 1) Base salary increases; 2) Windfall gains; and 3) The use of ESG measures in incentives.

 1. Given the high cost of living and inflation (arising from factors such as increased energy costs, shortages of goods and materials and the fallout from Covid) there has been increased pressure from investors to ensure base salary increases for executive directors are below those of the wider workforce. Around 90% of companies have reported a lower increase (typically 2%). Many companies have also reported interventions they have taken to support the wider workforce through one-off payments or salary increases focussed on the lowest paid.  

 2. There is also an expectation for remuneration committees to assess if executives have benefited from windfall gains (arising from the shares awarded during the Covid period), and if so, apply downwards discretion on the size of awards vesting. So far, around 10% of companies have reduced formulaic LTIP outcomes as a result of this.

 3. ESG continues to grow in significance – around 85% of companies have ESG metrics in their annual incentive and around 55% in their long-term incentive plans. For more information on this topic, see the research study I conducted last year on behalf of PwC. Paying for good for all (pwc.com)