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On 17 March 2022, Safestore Holdings plc (Safestore) sizeable dissent against its executive remuneration, with almost 27.9% of shareholder votes cast against the company’s remuneration report. This took place against the backdrop of a relatively uneventful annual meeting in which investors in the UK’s largest self-storage company waved through all agenda items, including four special resolutions that required a supermajority of 75% to pass.

Following recent engagements with key investors, Safestore’s management noted in its that it believed this case to be an unusual one insofar as the dissent was not a revolt against the company’s current executive remuneration arrangements, but rather a former remuneration policy:

‘It is understood that some shareholders who voted against the 2017 Remuneration Policy at its inception have a policy to vote against all future remuneration reports that reflect the subsequent execution of it…This vote does not represent a vote against Safestore's current Remuneration Policy, which received over-whelming shareholder approval at Safestore's 2020 Annual General Meeting.’

It is common practice in the UK for shareholders to vote against remuneration reports during years in which policies are not tabled—the latter being voted on every three years, whereas the report is up for shareholder scrutiny on an annual basis. Safestore believes its past remuneration policy to be the main reason for the dissent at its 2022 AGM, with the company noting that it ‘still continues to divide opinion amongst some shareholders, even though it was voted through in 2017’.

What Safestore failed to mention in its 2022 AGM results is that ahead of its 2017 AGM the company its initial attempt to put its remuneration policy to a vote alongside its long-term incentive plan (LTIP) on the grounds that ‘there was sufficient discomfort [from investors] with the quantum and some related issues to persuade the Committee to withdraw the resolutions in order to engage in further consultation’. When the remuneration policy and LTIP were finally voted on at a general meeting on 4 July 2022, both through by the narrowest of margins, with 50.8% and 51.3% support respectively. In contrast, at the same meeting Safestore’s Sharesave scheme was waved through with approximately 99.5% of votes cast in favour.

In the aftermath of the 2017 general meeting, Safestore unsurprisingly faced considerable levels of shareholder dissent against its remuneration report on an annual basis, which subsequently declined year on year until the introduction of a new remuneration policy in 2020 (48.3% in and 29.6% in ). However, following low levels of opposition against the company’s report and new remuneration policy in (3.2% and 2.1% respectively), as well as against its report in (3.4%), the question remains, why did Safestore see an uptick (27.9%) in shareholder opposition against its report during 2022?

Given that Safestore has that ‘some shareholders who voted against the 2017 Remuneration Policy at its inception have a policy to vote against all future remuneration reports that reflect the subsequent execution of it’, one reason for the uptick may be that the final vesting level for the 2017 LTIP is to be determined on 29 September 2022.  Following this date, both Safestore’s chief executive, Frederic Vecchioli, and chief financial officer, Andy Jones, will be able to exercise the 1,333,333 and 893,333 shares that they earned respectively during the five-year period of the controversial 2017 LTIP, which measured performance between 1 November 2016 and 31 October 2021. It may be that the uptick represented a last-ditch effort by a minority of investors to express their long-standing disapproval of the 2017 remuneration policy and its accompanying LTIP.

Executive remuneration is providing once again a hot topic during the 2022 AGM season, with Safestore being the ninth company in the FTSE 350 to have received significant (at least 20%) levels of opposition against its remuneration report. The only company to so far have failed to receive majority support for the non-binding resolution is Future plc, which 55.4% of investor votes cast against at its AGM on 3 February 2022. The average level of investor dissent against remuneration reports currently sits at 36.0%. 

In comparison, the 2021 AGM season saw a total of 37 remuneration reports in the FTSE 350 receive significant levels of opposition—three of which failed to receive majority support. However, the average level of investor dissent against remuneration reports was lower during the 2021 AGM season than our current data for the 2022 AGM season, at 33.0%.

As the 2022 AGM season has only just begun, with 63 FTSE 350 AGMs taking place so far, it is yet to be seen if executive remuneration proves even more contentious this year. However, if we calculate the percentage of companies receiving significant levels of dissent against the total of the number of companies analysed, we can get an idea as to the direction of travel. The 2021 AGM season saw 37 remuneration reports receive significant levels of dissent out of a total of 281 analysed companies (13.2%). In contrast, the 2022 AGM season data has so far seen nine such votes out of a total of 64 companies (14.1%). Therefore, if trends continue, the 2022 season will prove the more contentious.

For more information on the challenges and opportunities faced by public companies during the 2022 AGM season, as well as analysis of the 2021 AGM season, see our recent Trend Report: The evolving AGM: adapting to change—Market Tracker Trend Report