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PIRC has published its 2017 UK shareowner voting guidelines (24th edition). The key changes in each chapter from the version published in March 2016 are as follows.
The board of directors
- clear rationale must be given when the roles of chairman and chief executive at a listed company are proposed to be combined and should only ever be done so on a temporary basis and under exceptional circumstances;
- the re-election of an executive chairman except in exceptional circumstances will be opposed; finance directors should not be appointed as chairman of the same company;
- formally advertising vacancies for executive directors should be the normal practice;
- PIRC will not support the re-election of a nomination committee of a FTSE 350 company where the composition of the committee falls below, or has no credible proposal for achieving, the recommended level of female representation of 33%;
- statements in the previous guidelines regarding the additional flexibility that may be required (in terms of annual meetings and special meeting) by a UK listed company incorporated in an overseas jurisdiction which has a reduced level of legal protection compared to the UK have been removed;
- statements in the previous guidelines that the company secretary should not also be a director have been removed; and
- statements in the previous guidelines opposing the appointment of alternate directors have been removed.
Report and accounts, audit and financial controls
- PIRC clarifies that tax compliance fees charged by auditors should be recorded as non-audit fees for the purpose of calculating what percentage of audit fees are made up of fees for non-audit work.
Shareowner rights, capital stewardship and corporate actions
- Where a company has received a significant proportion of votes cast against a management proposed resolution, it should provide a statement within its RNS announcement and disclose in subsequent annual reports the steps taken to engage with shareholders on the substantive concerns represented by any "significant" votes.
Directors' remuneration
- Companies must disclose the consultants used and remuneration consultant fees on an annual basis; and
- PIRC notes that it has become "more common" for audit firms to provide remuneration consultancy, which PIRC considers wholly unacceptable.
Sustainability and corporate responsibility reporting
- The BEIS Green Paper on corporate governance reform is consistent with PIRC's interpretation of the law regarding directors' duties and the requirements to explain how the directors have fulfilled their duties under the CA 2006 in the Strategic Report.
The full text of the guidelines is available at:
http://pirc.co.uk/news-and-resources2/guidelines
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