UK Remuneration Review 2015

Transcription

1 UK Remuneration Review 2015 I n a ssoc ia t ion w it h

2 Preface Since the so called shareholder spring of 2012, executive pay has rarely been out of the headlines. Companies must now walk the tightrope of attracting and retaining their top executives in an increasingly global market place while avoiding allegations of fat cats. UK Companies have had to report on their Directors Remuneration since 2002 allowing shareholders a say, albeiit on an advisory basis. However In 2013 the UK government went much further and introduced new rules regarding the reporting of executive remuneration: The Remuneration Report The Remuneration Report will continue to include information on an annual basis explaining how much directors have been paid in the reporting year, and how the pay policy will be implemented in the current financial year. Now companies must also disclose the amount each director has been paid and to express this as a single figure taking account of all aspects of remuneration. The company must also explain on what basis the level of variable pay has been set therefore linking actual performance to remuneration. As before voting on the remuneration report is on an advisory basis only. The Remuneration Policy The Remuneration Policy is a new requirement detailing how each element of a directors remuneration package supports the short and long term strategy of the company, its potential value, and any performance measures relating to it. It must also set out a policy for paying newly recruited directors and a policy for loss of office payments. The Policy must be submitted to a binding shareholder vote at least every 3 years saw the vast majority of the FTSE350 put their Remuneration Report and Remuneration Policy to a shareholder vote. For the first time it is possible to see how shareholders voted on remuneration on a binding basis and also their views on the future direction of executive pay. This report looks at: - Voting across the FTSE350 enabling individual companies to compare their voting results with their peers. - Which investors most commonly voted against Remuneration Reports and Policies and why. - A look ahead to 2015 with Remuneration policy changes from key asset managers. Contents UK Remuneration Review Preface 4 Unclear messages 7 What the shareholders say 10 The policies 13 Appendix Part 1 FTSE 100 Companies 16 Appendix Part 2 FTSE 250 Companies 2

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4 Unclear messages Why rates of support for Remuneration Reports and Policies have become detatched, and how issuers can understand what shareholders want. A lot has been written about the conflicting messages investors sent to issuers in 2014 through their voting patterns on executive pay. Indeed, Ecclesiastical s Neville White told Proxy Insight earlier this year that the different outcomes for binding Remuneration Policy and advisory Remuneration Reports were at times schizophrenic. Overall, however, the average rate of support across the FTSE100 was very close with 93.7% for Policy and 92.8% for Reports. Across the FTSE250, the results were exactly the same at 95.2%. Analysis on the next two pages reviews the companies in the FTSE100 and FTSE250 with the lowest support for both resolution types. 4

5 FTSE100 While Burberry was the only FTSE100 company to lose a remuneration vote, a number failed to garner reasonable support on either or both categories. The companies with the lowest support in each category are listed below while the full list may be found in the appendix to this report. Interestingly, while 85 companies secured support for their Remuneration Policy of 90% or more, only 78 managed to reach this level in votes on their Remuneration Report. While Carnival and to an extent, Burberry, HSBC, Reckitt Benkiser and Astra Zeneca fared poorly in both votes others had issues in just one of the categories. Despite receiving a very low level of support for their Policy, Standard Chartered s Report actually received a higher than average level of support. Likewise, Pearson s Policy had a highly respectable level of support but performed poorly for the Report vote. These results matter, and are likely to prove confusing for issuers. Support for Policies may indicate a company is heading in the right direction but this is unlikely to make life easier for investor relations teams trying to get their Reports approved. Having approved the principles for executive pay, shareholders may still object to the actual compensation planned once details are announced in proxy filings each year. Industries where returns can be highly volatile, such as banks, may be particularly affected. The divergent outcomes for Remuneration Report and Remuneration Policy votes have been described as schizophrenic FTSE 100-Lowest support for remuneration policy Remuneration Policy Remuneration Report Rank Company % For Vs Avg % For Vs avg 1 Standard Chartered PLC Carnival PLC WM Morison Supermarkets PLC HSBC Holdings PLC Reckitt Benckiser Group PLC Source: Proxy Insight FTSE 100-Lowest support for remuneration report Remuneration Report Remuneration Policy Rank Company % For Vs Avg % For Vs avg 1 Burberry Group PLC Carnival PLC AstraZeneca PLC Pearson PLC BG Group PLC Source: Proxy Insight 5

6 FTSE250 Abstentions / Withheld Votes As many as 14% of FTSE250 companies failed to win 90% support for Policy in 2014, while 15% failed to reach the same level for Report. Yet only DS Smith fared badly on both votes; Investec, Hiscox, ICAP and Cranswick had poor results for their Policies but high support for their Reports, while conversely Crest Nicholson, and International Personal Finance had good support for their Reports but fared badly on their Policies. Again, the worst performers are highlighted in a table at the end of this report. One of the less well-reported facts is that companies understandably only base their results on votes cast for or against a proposal, effectively ignoring shareholders who choose perhaps to send a softer message by casting an Abstain or Withhold vote. In some cases, this could make a significant difference to the vote. For example, BP s Report received just over 1,518 million votes (16.1%) against, but 2,218 million votes were withheld. FTSE 250-Lowest support for remuneration policy Remuneration Policy Remuneration Report Rank Company % For Vs Avg % For Vs avg 1 Investec PLC Hiscox PLC ICAP PLC Cranswick PLC Smith (DS) PLC Source: Proxy Insight FTSE 250-Lowest support for remuneration report Remuneration Report Remuneration Policy Rank Company % For Vs Avg % For Vs avg 1 Crest Nicholson Holdings PLC International Pearson Finance PLC National Express Group PLC Tullett Prebon PLC SVG Capital PLC Source: Proxy Insight 6

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8 What the shareholders say A look at the key determinants of voting decisions, with the corporate governance teams of the most stringent institutional investors. Remuneration Reports Investors represented on Proxy Insight s database supported management in votes on Remuneration Reports an average of 83.5% of the time, across the FTSE350 in Only 5 investors Quantitative Management Associates, Ignis Asset Management, Aerion Fund Management, Putnam and Parametic Portfolio Associates (voting over 50 times) supported every such resolution. The Remuneration Report therefore continues to be a contentious issue, with many shareholders unconvinced that current rewards are suitably linked to the performance of the companies themselves. The investors with the highest level of opposition are shown in Figure 1. Aviva is the most aggressive investor, supporting less than half of all Remuneration Reports it voted for. Helpfully, Aviva disclose the rationale for their voting and so it is possible to categorise the reasons for their opposition, as seen in Figure 2 (see overleaf.) Nearly half of all Aviva s opposition to Remuneration Reports was due, at least in part, to a lack of disclosure. In some cases, this means a general lack of detail is included in the Reports, while a more specific recurring theme is a lack of information regarding retrospective bonus awards. Either way, Aviva clearly believes pay awards are being made without adequate rationalisation on the part of remuneration committees. Top 10 Investors opposing Remuneration Reports 2014 Aviva Investors PGGM Investments RPMI Ecclesiastical Investment APG (Stichting PF ABP) Threadneedle Investments F&C Asset Management Florida State Board Goldman Sachs AM Dimensional Fund Advisors % For % Against % Abstain Figure 1 Source: Proxy Insight The lack or limits of appropriate approve, they are not averse to making linkages between compensation their views felt. For Aviva, Burberry falls and performance is a common in to this camp, as does WPP. theme in discussions with Corporate Governance teams and unsurprisingly features highly in Aviva s rationale. Recent press coverage on WPP and Standard Chartered, both of whom have seen big increases in executive pay, is of interest here. While many Dutch Pension fund PGGM voted against 45% of all their Remuneration Report votes, the highest of our survey. PGGM also provide detailed rationale for their voting decisions and while there are many company specific WPP shareholders although not issues raised a number of issues including Aviva are relaxed about the commonly occur: package Sir Martin Sorrell recieves due to the company s recent performance, the same cannot be said of Peter Sands at Standard Chartered after a series of profit warnings at the bank. Insufficient Disclosures 82% (of votes against) Not Sufficiently Stretching 13% Not linked to performance 9% Corresponding poor performance of However, it is worth noting that a further critical factor in Aviva s considerations business 9% Pay is high relative to peers 7% is whether pay levels are simply excessive. If the pure quantum of Commenting on our results, Marcel the package is too high for them to Jeucken, Managing Director

9 Key issues causing Aviva to oppose Remuneration Reports Lack of Disclosure Lack/Low Performance link Excessive Actual/Potential Pay Level Lack of Retrospective Disclosure on Bonus Awards Inappropriate Discretionary Payments Generous Pension Undue Ratcheting up of pay No Limits Under Incentive Schemes Lack of Claw-back Policy Inappropriate Service Contracts Lack of Independence on Committee 6% 5% 10% 7% 16% 15% 14% 31% 37% 43% 49% Figure 2 Source: Proxy Insight Responsible Investment at PGGM Investment said: Voting against proposals is not something PGGM takes lightly. PGGM is however very pleased that in the UK shareholders can vote on both remuneration policies and reports as this significantly strengthens the system of proper checks and balances. The UK is a pioneer on this issue and we believe it can (and will) improve remuneration practices over time. RPMI has been a leading driver in promoting longer term remuneration targets around remuneration. It is therefore of little surprise to see it at third place in our rankings. Ecclesiastical Investment Management has also been a vocal player on the subject of executive pay. Commenting on our study, the investor s Head of SRI, Neville White, stated: We are gratified by these results as they suggest our rigorous policy against supporting excessive awards disconnected from long-term, superior outperformance is firmly integrated into our voting outcomes. Among the top UK companies (FTSE30) we find it increasingly difficult to support executive remuneration packages, and these results show that in around half of FTSE350 cases we have been unable to support management. The top US public pension fund, Florida State Board of Administration (SBA) provided Proxy Insight with some of the key criteria it applies when voting on remuneration. Mike McCauley, its Senior Officer for Investment Programs & Governance, highlighted these points: SBA voting on FTSE companies is similar to other developed markets and generally in line with its overall global voting statistic of approximately 20% to 25% votes against. Poor disclosure surrounding performance objectives, award thresholds, and key structural features of any existing/proposed equity plans. Voting against proposals is not something PGGM takes lightly Sufficient transparency is necessary to fully understand how short/long term incentive plans have been designed and have worked. SBA prefers to see a strong performance orientation embedded within compensation framework, with high correlation between financial performance, total compensation, and total stock returns (and votes accordingly). It also examines compensation on a relative basis, adjusting for industry and size, and utilises several external compensation models (e.g., ISS, Glass Lewis, and Farient Advisors). Remuneration Policy For all investors in the Proxy Insight database in 2014, the average support for Remuneration Policy across the FTSE350 was 88.5%, five percentage points higher than the average support for the Remuneration Report. Eight investors supported every resolution they voted on, including TIAA-CREF and Ignis Asset Management. As a binding resolution, the level of opposition is lower than for Remuneration Report. However, there is still significant opposition from key investors, as seen in Figure 3 (see overleaf.) Fidelity Worldwide took a much tougher stance on Remuneration for the 2014 proxy season, citing concerns around the lack of long-term structure in executive pay. Trelawny Williams, Global Head of Corporate Finance at Fidelity, commented on our analysis as follows: Our votes against management were a consequence of our campaign to extend LTIP retention periods to five years. We are not proud of having had to vote against so many companies but on the plus side it has led to significant and continuing change on the ground 9

10 with over 50 FTSE companies now having an LTIP share retention period of over three years, up from only 13 two years ago. Of additional interest is that Fidelity is the only investor to actually vote against either of the remuneration categories as opposed to a combination of against and abstain votes. Aviva applies much the same concerns for its votes against Remuneration Policy as for its votes against Reports (Figure 4.) However, in a reversal of its priorities, excessive potential pay is its highest concern when deciding how to vote on policies. The lack of bonus deferral shows Aviva s concerns that companies are not being long-term enough in their planning of variable pay. In addition, Aviva also believes certain boards are seeking too much discretion to determine remuneration, rather than seeking shareholder approval. Linked to this point is the lack of suitable clawback should a reward prove to be inappropriate as a result of future losses. The final issue raised by Aviva is the lack or limit of a shareholding requirement. The investor remains a supporter of requiring executives to think more long-term and increase their linkage to the wider shareholder base by owning stock in the company they manage. Top 10 Investors opposing Remuneration Policies 2014 Fidelity Worldwide Ecclesiastical Investment Aviva Investors RPMI F&C Asset Management PGGM Investments APG (Stichting PF ABP) Threadneedle Investments Florida State Baord Dreyfus Corp % For % Against % Abstain Figure 3 Source: Proxy Insight Report versus Policy Chartered had very poor support for its forward looking Policy, though The different approaches investors take to Remuneration Reports and Policies continues to surprise and enliven the debate around executive its Report received a slightly above average level of support compared to the wider FTSE100. Conversely, Burberry s Report failed, while its compensation. But why should this be Policy received reasonable, albeit so? True, one is historic, while the other below average, support. is forward looking. One is advisory and the other binding. But should In terms of actual voting, three Dutch there really be any difference between pension funds PGGM Investments, investors voting on the two? Tandtechniek Stichting Pernsioenonds and BPL Pensioen opposed over 20% This report suggests investors take a slightly more aggressive stance on Reports than they do on Policies, although in reality there seems little difference at an aggregate level. Most variations appear to be peculiar to each company; for example, Standard more Remuneration Reports than they did for Remuneration Policies. Conversely while Fidellity Worldwide opposed 57% of Policies this fell to only 13 % for Reports. Likewise Ecclesiastical s opposition was 47% and 32% for Policies and Reports respectively. Key issues causing Aviva to oppose Remuneration Reports Excessive Actual/Potential Pay Level Lack Bonus Deferral Too Much Discretion Low/No Shareholding Requirement Lack of Disclosure Lack of Claw-Back Policy Lack/Low Performance Link Inappropriate Service Contracts Uncapped Bonus Too Short Term Figure 4 7% 11% 11% 13% 16% 16% 16% 26% 30% 29% Source: Proxy Insight

11 The policies Here, we review how voting policies are changing for a number of significant investors Aviva: A new policy includes requests for annual disclosure of the remuneration policy table within the remuneration report. It also includes requests for identifiable limits to executive compensation, as Aviva is unlikely to support compensation without limits. Furthermore, the new policy indicates support for companies that are accredited as paying the living wage, and expands and clarifies the investor s ideal clawback provision to include performance adjustment or post-vesting clawback. BlackRock: Its new policy has a more detailed explanation of BlackRock s say on pay analysis where its old policy says say on pay votes are likely to correspond with votes on the directors who are compensation committee members, the new policy explains the following preferences in compensation: disclosure; long-term; not solely formulaic; explanation of unusual structure; avoid benchmarking; good peer selection; no arbitrary limits; no preference for specific plan; and responsive to shareholders. The policy also explains BlackRock s engagement process when it has concerns about executive compensation. BNP Paribas: Its new approach expands requirements for a company s remuneration policy to include: an explanation of the philosophy of the remuneration policy; the link with strategy and HR policy; the split between the different remuneration mechanisms chosen; long-term plan with extrafinancial performance metrics. New negative aspects of the remuneration policy include remuneration that is disproportionate relative to the evolution of its employees median remuneration. For approving short-term remuneration, BNP s new policy adds requirements for the disclosure of rules for formulating short-term remuneration and performance criteria of short-term remuneration. The new policy adds clawback and performance disclosure requirements for long term remuneration. SBA will vote for proposals to ratify or renew management/ profit sharing contact with other companies CalSTRS: The pension fund s old policy says that additional forms of compensation such as retirement benefits are not warranted for director compensation. The new policy explains that this is because this kind of benefit could create perverse incentives. An old policy says the Audit Committee should receive greater compensation than other Board Committees, while the new policy doesn t mention this. Charles Schwab: Used to simply follow Glass Lewis, but now has its own policy, which is used in addition to the Glass Lewis policy and includes: advisory vote on executive compensation; equity awards plans; employee stock purchase plans; and the repricing of options. CPPIB: A new policy cautions against the use of external peer benchmarking as it could lead to an escalation in executive pay, unsupported by company performance. The new policy also expands the investor s clawback policy to include other performance metrics, as well as misstated financial results. F&C: Its new policy expands on performance metrics and talks about reputational and regulatory risks for companies and industries where pay levels were seen by regulators, investors and the general public as excessive and insufficiently aligned with performance. Florida SBA: The new policy says the SBA will vote for proposals to ratify or renew management/profit-sharing contracts with other companies (in which the company retains or gains management control over the other). It also expands and clarifies the investor s views on golden parachutes. Glass Lewis: The proxy adviser s new policy has a section on risk-taking in its opening paragraph. It also includes implementation and effectiveness as criteria for its say on pay review. The new policy includes a section on one-off awards and expands on the following points: clawback; compensation consultants; golden parachutes; and employee stock purchase plans. ISS: A new scorecard is used to evaluate equity plans. Rather than listing pass and fail requirements, the scorecard is designed to give a more balanced review of equity plans. 11

12 Janus: The old policy says Janus will generally vote against plans where the proposed cost of an equity-based-plan is above the allowable cap determined by the proxy adviser. The new policy adds that the investor will also vote against if plan s features and grant practices are misaligned with the maximising of shareholder value. OTPP: The investor s new policy expands say on pay guidelines, and aligns pay with performance. It also lists certain trigger points that could result in an against vote on say on pay. The new policy changes the wording of disclosure requirements from hurdle rate to vesting conditions. Royal London: A new policy says the investor will vote against a remuneration policy if it has concerns with how remuneration is structured or if the policy allows for excessive remuneration. The new policy adds that Royal London will vote against the remuneration policy when pension payments are excessive and out of line with pension benefits awarded to employees, and expands the approach to performance periods from a hard requirement for a minimum of three years to preferably for five years. It also adds a section on additional post-vesting holding periods and adds a minimum credit quality performance requirement. SWIB: The old policy says SWIB will evaluate the link between pay and performance by reviewing proxy materials. The new policy details performance evaluation criteria that SWIB considers positive and negative and its position on non-performance based compensation. The old policy says plans that are not clear or lack specific information on which to determine pay and performance links are typically not supported. The new policy details exactly what must be disclosed (e.g. Performance targets; Financial Metrics; Compensation drivers etc.). The acceptable level of dilution for compensation plans has been revised from 20% to 15%. The new policy also gives more detail and specifics on retirement plans and severance payments. T. Rowe Price: An old policy says votes against bank bonuses are likely, while the new policy has no mention of them. An old policy says the investor will generally vote for Section 162(m) proposals. Their new policy adds unless evergreen provisions are present. Union Investment: The new policy includes a request for key non-financial performance indicators and requests quantifiable limits and disclosure for remuneration. It takes a critical view of retrospective improvements to existing share-option schemes or performance measures that make it easier to achieve specified targets. So what? Companies that successfully passed both remuneration votes, even by small margins, may be tempted to think that this year s focus on compensation will not have long-term consequences and continue broadly as they are. However, the following risks illustrate why this may be a poor decision: Bad PR Burberry, Standard Chartered, Barclays and others all received negative press coverage over pay practices. More than merely embarrassing these companies, the negative coverage will no doubt cause issues with staff, customers and suppliers, as well as with shareholders. Increasing Investor scrutiny The voting behaviour of investors is under greater scrutiny than ever before and the need to be shown to be good stewards is of paramount importance. In addition, many shareholders are introducing more stringent rules on what forms of remuneration are acceptable. Competition for Capital In a global equity market, issuers must compete with numerous other sources of capital. Removing any obstacles to shareholder support is surely a no-brainer for Investor Relations teams. Activism Low levels of shareholder support is a key screening tool used by Activist investors when selecting new targets. Indeed, it is no coincidence that Marathon Partners chose to nominate three directors to the board of US issuer Shutterfly, after the company received just 50.01% support for its Remuneration Report last year. 12

13 Appendix Part 1: FTSE 100 Companies Remuneration Policy Remunerartion Report Company % FOR Vs Avg % FOR Vs Avg 3i Group PLC Aberdeen Asset Management PLC Admiral Group PLC Aggreko PLC Anglo American PLC Antofagasta PLC ARM Holdings PLC Ashtead Group PLC Associated British Foods PLC AstraZeneca PLC Aviva plc Babcock International Group PLC BAE Systems PLC Barclays PLC Barratt Developments PLC BG Group PLC BHP Billiton PLC BP PLC British American Tobacco PLC British Land Co PLC BT Group plc Bunzl PLC Burberry Group PLC Capita PLC Carnival PLC Centrica PLC Coca-Cola HBC AG Compass Group PLC CRH PLC Diageo plc Direct Line Insurance Group PLC Dixons Carphone PLC

14 easyjet PLC Experian PLC Fresnillo PLC Friends Life Group Ltd G4S PLC GKN PLC GlaxoSmithKline PLC Glencore Plc Hammerson PLC Hargreaves Lansdown PLC HSBC Holdings plc Imperial Tobacco Group PLC InterContinental Hotels Group PLC International Consolidated Airlines Group SA Intertek Group PLC Intu Properties PLC ITV PLC Johnson Matthey PLC Kingfisher PLC Land Securities Group PLC Legal & General Group PLC Lloyds Banking Group Plc London Stock Exchange Group PLC Marks & Spencer Group PLC Meggitt PLC Mondi PLC National Grid PLC Next PLC Old Mutual PLC Pearson Plc Persimmon PLC Prudential PLC Randgold Resources Ltd Reckitt Benckiser Group PLC Reed Elsevier PLC Rio Tinto PLC Rolls-Royce Holdings plc Royal Bank Scotland plc (The) Royal Dutch Shell PLC (A) Royal Mail PLC RSA Insurance Group PLC SABMiller PLC Sage Group (The) PLC Sainsbury (J) PLC

15 Schroders PLC Severn Trent PLC Shire PLC Sky PLC Smith & Nephew PLC Smiths Group PLC Sports Direct International PLC SSE PLC St. James s Place PLC Standard Chartered PLC Standard Life PLC Taylor Wimpey PLC Tesco PLC Travis Perkins PLC TUI Travel PLC Tullow Oil PLC Unilever PLC United Utilities Group PLC Vodafone Group Plc Weir Group PLC Whitbread PLC Wm Morrison Supermarkets PLC Wolseley PLC WPP PLC Average Notes: 1 As dual listed companies Rio Tinto PLC and BHP Billiton PLC had Remuneration Report votes for both UK and Austalian law. The UK law vote was used for this analysis 2 Data shown was for Carphone Warehouse PLC 15

16 Appendix Part 2: FTSE 250 Companies Remuneration Policy Remuneration Report Company % FOR Vs Avg % FOR Vs Avg 3i Infrastructure PLC Aberforth Smaller Companies Trust Plc Acacia Mining PLC Afren PLC Al Noor Hospitals Group PLC Alent PLC Alliance Trust PLC Allied Minds PLC AMEC Foster Wheeler PLC Amlin PLC AO World plc Ashmore Group PLC AVEVA Group PLC Balfour Beatty PLC Bank of Georgia Holdings plc Bankers Investment Trust PLC Barr (A G) PLC BBA Aviation PLC Beazley PLC Bellway PLC Berendsen PLC Berkeley Group Holdings (The) PLC Betfair Group PLC BH Macro Ltd Big Yellow Group PLC BlackRock World Mining Trust plc BlueCrest AllBlue Fund Ltd Bodycote PLC Booker Group PLC Bovis Homes Group PLC Brewin Dolphin Holdings plc BRIT PLC

17 British Empire Securities and General Trust Britvic PLC Brown (N) Group PLC BTG PLC Bwin.party digital entertainment plc Cable & Wireless Communications PLC Cairn Energy PLC Caledonia Investments PLC Capital & Counties Properties PLC Card Factory PLC Carillion PLC Catlin Group Ltd Centamin PLC Cineworld Group PLC City of London Investment Trust PLC Close Brothers Group PLC CLS Holdings PLC Cobham PLC Colt Group SA Computacenter PLC Countrywide plc Cranswick PLC Crest Nicholson Holdings plc Croda International PLC CSR PLC Daejan Holdings PLC Dairy Crest Group PLC DCC PLC De La Rue PLC Debenhams PLC Dechra Pharmaceuticals PLC Derwent London PLC Dignity PLC Diploma PLC Domino Printing Sciences PLC Domino s Pizza Group PLC Drax Group PLC Dunelm Group PLC Edinburgh Investment Trust Plc Electra Private Equity PLC Electrocomponents PLC Elementis PLC Enterprise Inns PLC Entertainment One Ltd

18 Essentra PLC Esure Group plc Euromoney Institutional Investor PLC Evraz plc F&C Commercial Property Trust Ltd Fidelity China Special Situations PLC Fidelity European Values PLC Fidessa Group PLC FirstGroup PLC Fisher (James) & Sons PLC Foreign & Colonial Investment Trust Galliford Try PLC Game Digital Plc Genesis Emerging Markets Fund PLC Genus PLC Go-Ahead Group (The) PLC Grafton Group PLC Grainger PLC Great Portland Estates PLC Greencore Group PLC Greene King PLC Greggs PLC Halfords Group PLC Halma PLC Hansteen Holdings plc Hays PLC Hellermanntyton Group PLC Henderson Group PLC HICL Infrastructure Company Hikma Pharmaceuticals PLC Hiscox Ltd Home Retail Group PLC Homeserve PLC Howden Joinery Group PLC Hunting PLC ICAP PLC IG Group Holdings PLC IMI PLC Inchcape PLC Indivior PLC Infinis Energy Plc Informa PLC Inmarsat PLC Intermediate Capital Group PLC

19 International Personal Finance PLC International Public Partnerships Limited Interserve PLC Investec PLC IP Group PLC Jardine Lloyd Thompson Group PLC JD Sports Fashion PLC Jimmy Choo PLC John Laing Infrastructure Fund JPMorgan American Investment Trust JPMorgan Emerging Markets Inv Trust Jupiter Fund Management PLC Just Eat PLC Just Retirement Group PLC Kaz Minerals PLC (was Kazakhmys PLC) Keller Group PLC Kennedy Wilson Europe Real Estate plc Kier Group PLC Ladbrokes PLC Laird PLC Lancashire Holdings Ltd Law Debenture Corporation LondonMetric Property PLC Lonmin PLC Man Group PLC Marston s PLC Melrose Industries PLC Mercantile Investment Trust Merlin Entertainments plc Michael Page International PLC Micro Focus International PLC Millennium & Copthorne Hotels PLC Mitchells & Butlers PLC MITIE Group PLC Moneysupermarket.com Group PLC Monks Investment Trust Morgan Advanced Materials PLC Murray International Trust PLC National Express Group PLC NB Global Floating Rate Income Fund NMC Health PLC Northgate PLC Nostrum Oil & Gas PLC Ocado Group PLC

20 Ophir Energy PLC Oxford Instruments PLC Pace PLC Paragon Group of Companies (The) PLC PayPoint PLC Pennon Group PLC Perpetual Income and Growth Investment Trust Plc Personal Assets Trust Petra Diamonds Ltd Petrofac Ltd Pets at Home Group Plc Phoenix Group Holdings Playtech PLC Polar Capital Technology Trust Polymetal International plc Poundland Group Plc Premier Farnell PLC Premier Oil PLC Provident Financial PLC PZ Cussons PLC QinetiQ Group PLC Rank Group (The) PLC Rathbone Brothers plc Redefine International plc Redrow PLC Regus PLC Renishaw PLC Rentokil Initial PLC Restaurant Group (The) PLC REXAM PLC Rightmove PLC RIT Capital Partners PLC Riverstone Energy Rotork PLC RPC Group PLC RPS Group PLC Saga PLC Savills PLC Scottish Investment Trust Scottish Mortgage Investment Trust plc Segro PLC Senior PLC Serco Group PLC Shaftesbury PLC

21 SIG PLC Smith (DS) PLC SOCO International PLC Spectris PLC Spirax-Sarco Engineering PLC Spire Healthcare Group PLC Spirit Pub Company PLC SSP Group PLC St Modwen Properties PLC Stagecoach Group PLC SuperGroup PLC SVG Capital PLC Synergy Health PLC Synthomer plc TalkTalk Telecom Group PLC Tate & Lyle PLC Ted Baker PLC Telecity Group PLC Telecom plus PLC Temple Bar Investment Trust Plc 0 0 Templeton Emerging Markets Investment Trust Thomas Cook Group PLC TR Property Investment Trust TSB Banking Group PLC Tullett Prebon PLC UBM PLC UDG Healthcare PLC UK Commercial Property Trust Ltd Ultra Electronics Holdings PLC UNITE Group PLC Vedanta Resources PLC Vesuvius PLC Victrex PLC Wetherspoon (J D) PLC WH Smith PLC William Hill PLC Witan Investment Trust PLC Wood Group (John) PLC Workspace Group PLC Worldwide Healthcare Trust PLC WS Atkins PLC Zoopla Property Group PLC Average

22 Notes: data used as Rem Policy included 2 No Rem Policy in 2014 and meeting not yet occurred in New Issue - no AGM yet 4 No Rem Policy or Rem Report vote in Vote Breakdown Not Disclosed 22

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