UK Corporate Governance: Addressing Shareholder Concerns
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Introduction: UK Corporate Governance: Addressing Shareholder Concerns
This essay involves the implementation of “The Annual General Meeting (AGM)” along with the “Investment Association’s public register”. The “Investment Association's public register” involves the potential for identification of companies that are listed in the United Kingdom and have faced “significant dissent among shareholders” for certain governance issues. It caters to “a public record of companies that have faced shareholder concerns”. The “U.K. Corporate Governance Code” considers “principles and practices of good corporate governance in the country” and associates “accountability, transparency, and shareholder engagement”. The code needs organizations on the “Investment Association's public register to publicly address the concerns raised by shareholders”. Stakeholders play an imperative role in the maintenance of “corporate governance” while providing a necessary assessment of managing transparency, “ensuring long-term sustainable growth”, and increasing accountability for the organizations. The concerns of the stakeholders and the company’s responses while recognizing the same have been discussed. The significance of clarifying the “context of corporate governance in the United Kingdom” has been reflected in the concerns of the organizations and relevant case studies.
Shareholder Concerns: Causes and Manifestations
The concerns of shareholder management have been described under certain factors such as “Identification and analysis of specific concerns”, “Factors contributing to significant dissent among shareholders”, and “Real-life case examples highlighting prominent shareholder concerns”. As cited by (Cheffins and Reddy, 2022), stakeholders show interest in gains, “board composition”, remuneration, independence, “environmental and social responsibility, risk management, and shareholder rights”. Stakeholders are aware of the return on investment through “long-term value creation”. It is their right of them to address the risks associated with “environmental and social challenges” for contributing towards rapid growth and reputation. The factors which contribute towards “significant dissent among shareholders” involve “governance failures, excessive executive pay, lack of board accountability, insufficient stakeholder engagement, poor risk management practices, and instances of corporate misconduct”.
Stakeholders are supposed to protest when their interests are not being kept, and, in this regard, appropriate “decision-making processes” is required to assist real-life issues. The case examples of Unilever PLC have been emphasized based on Resolution 2 (Unilever.com, 2023). The reasons for the failure of the resolution have been considered to be “executive pay and accountability within the company”. The case example of “Ocado Group PLC” emphasizes issues about “board composition and the need for independent directors”. The demonstration of shareholder management has been discussed to enhance the opportunities of “governance contexts”.
Recognition of the issues is the primary step to mitigate the same, and, in this regard, the concerns of shareholders have been addressed. Some of these are “Evaluation of approaches to address shareholder concerns”, “Analysis of the effectiveness of different strategies”, and “Examination of communication channels” which enable sound strength management (Singh et al. 2021).
Evaluation of approaches to address shareholder concerns
The concern of shareholders depends on financial gains which evaluates multiple factors. Some of the factors are “engaging in dialogue with shareholders, conducting regular shareholder meetings and consultations, establishing shareholder committees or advisory panels, and implementing shareholder feedback mechanisms”. Organizations must renovate their policies for justifying and aligning with the satisfaction of the employees.
Analysis of the effectiveness of different strategies
Stakeholder management requires a significant approach that requires the active participation of them. The association of positive communicating concerns of the primary stakeholders is o be considered that ensures “proactive engagement with shareholders through regular meetings and consultations can foster trust and understanding” (Reddy and Cheffins, 2022).
Examination of communication channels
Strong relationships and customer loyalty can be maintained through proper communication channels. In this regard, the code of “Corporate Governance” is essential to be aligned to a certain extent. As stated by Cheffins and Reddy (2022), the maintenance of regular communication can be availed through “annual reports, dedicated investor relations websites, press releases, social media platforms, and direct engagement through meetings and conferences”. The visibility of the company has to be enhanced through the aforementioned concerns that help to “foster meaningful dialogue”.
Evaluation and Analysis
Assessment of outcomes and impacts
The consideration of AGM has been involved in this regard, which discusses the performance of a company for electing the next director of the company. The shareholder concept, on the other hand, has been associated with the “UK Corporate Governance Code”. It “sets out standards of good practice for listed companies on board composition and development, remuneration, shareholder relations, accountability, and audit”. It requires an investment of the shareholders for assessing “accountability, transparency, probity” (Deloitte.com, 2023). The efforts of the company are measured through the changes conducted regarding certain factors. The factors include “changes in governance structures, policies, and practices, improvements in stakeholder relationships, increased shareholder engagement, and enhanced accountability and transparency”.
Evaluation of responsiveness and transparency
The abovementioned factors are responsible for managing sustainability, reputation, and company performance. The credibility of a company depends on the responsiveness of the organization towards its primary stakeholders, that is its investors and clients (Singh et al. 2021). The maintenance of transparency has been involved through significant “governance practices, decision-making processes, and progress made in addressing concerns”. For considering practical evaluation certain case examples have been discussed that clarify creditors and shareholders of different organizations.
Identification of Challenges or Limitations
The consideration of a fixed annual amount has to be managed with the governance code. Besides this, it also helps to address the gaps in the effort of the organization. As per the views of Cheffins and Reddy (2022), some of these gaps are "insufficient measures taken to address specific concerns, lack of genuine engagement with shareholders, inadequate disclosure of information, or failure to address underlying systemic issues". AGM also provides necessary concerns to identify the mitigating objects for these limitations that are required to be managed with the activities of the shareholders. Successful sustainability has to be managed in the contemporary corporate world, and, for this purpose, the engagement of treasury shares can be a necessary step to be approached.
Recent Case Examples
Case 1: Unilever PLC Annual General Meeting (AGM) held on May 3, 2023
Shareholder Concerns: The Unilever PLC AGM’s key stakeholder has raised concern regarding “the approval of the Directors' Remuneration Report”.
Strategies and Actions Taken
Directors' Remuneration Report: Resolution 2, containing "the approval of the Directors' Remuneration Report" failed. For this, the commitment to shareholder engagement has been questioned. The statement of the AGM has been asked within the next 6 months for pursuing effective action.
Shareholder Resolutions: AGM’s resolutions have been approved except Resolution 2 which orients the concern of “the approval of the Directors' Remuneration Report” that failed (Unilever.com, 2023).
Board Appointments: Shareholders “elected or re-elected” several directors such as “Nils Andersen, Judith Hartmann, Adrian Hennah, Alan Jope, Andrea Jung, Susan Kilsby, Ruby Lu, Strive Masiyiwa, Youngme Moon, Nelson Peltz, Graeme Pitkethly, Hein Schumacher, and Feike Sijbesma”.
Outcomes and Implications: Failure of Resolution 2 clarifies the dissatisfaction of stakeholders following the “Directors' Remuneration Report”. The “willingness to take appropriate actions based on the feedback received” has been followed.
Case 2: Ocado Group plc Annual General Meeting (AGM)
Shareholder Concerns: Ocado Group plc’s AGM raised shareholder concerns regarding not mentioning the required information (Ocadogroup.com, 2023).
Strategies and Actions Taken
Meeting Format: Physical meeting is held to provide opportunities for raising concerns.
Appointment of Proxy: The shareholder’s interests are counted through their votes.
Proxy Voting Instructions: Considering proxy while voting has been evaluated as “proxy's discretion” and it allows shareholders to take part without being physically present.
Multiple Proxy Appointments: Shareholders can opt for “more than one proxy” to enhance their participation.
Proxy Voting Options: The resolution of "Vote Withheld" involves decision-making that provides flexibility.
Form Completion and Submission: The completion of the proxy form involves signature and dating based on shareholders' intentions.
Outcomes and Implications: Ocado Group plc manages shareholder engagement by "facilitating proxy voting and providing clear instructions for participation". It helps to foster accountability and shareholder transparency.
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Conclusion
This study provides sound ideation of “key findings regarding shareholder concerns and companies' responses”. As per the Shareholder Concerns AGMs of “Unilever PLC” and “Ocado Group plc” have been demonstrated. The stakeholders of these organizations are evidence of the performance and potential of the organizations. “Voting on resolutions, including director appointments and remuneration reports” provides clarification on the same. Unilever PLC's board has expressed disappointment regarding the “failure of Resolution 2 and committed” to associating with stakeholders and facilitating their review. Ocado Group plc involves stakeholder participation by “proxy voting” and provides “clear instructions for appointment and submission”. The offline meeting held by this organization helps to connect face-to-face which helps better shareholder management. The implementation of “Corporate Governance Practices and Future Research Directions” has been aligned with increased engagement of stakeholders. The aforementioned case implies the significance of “companies actively engaging with shareholders and addressing their concerns”. The remuneration of directors also plays a significant role which has been evidenced in the failure of “Resolution 2 at Unilever PLC's AGM”. The engagement of “Stakeholder Participation” and “Proxy Voting” have been described and have been merged with “Research Directions” for future opportunities. The maintenance of shareholder management and the valuable “impact of remuneration policies on shareholder voting, and the role of technology in enhancing shareholder participation” have been emphasized in this study.
References
Cheffins, B.R. and Reddy, B.V., 2022. Thirty years and done–time to abolish the UK Corporate Governance Code. Journal of Corporate Law Studies, pp.1-40. Available at: https://www.tandfonline.com/doi/pdf/10.1080/14735970.2022.2140496?needAccess=true&role=button (Accessed on: 08.05.23)
Deloitte.com, 2023. Investment Association publishes Public Register of shareholder dissent. Available at: https://www2.deloitte.com/uk/en/pages/audit/articles/investment-association-publishes-public-register-of-shareholder-dissent.html.html (Accessed on: 08.05.23)
Lexisnexis.co.uk, 2023. Investment Association (IA) Public register. Available at: https://www.lexisnexis.co.uk/legal/guidance/investment-association-ia-public-register (Accessed on: 08.05.23)
Ocadogroup.com, 2023. Attendance Card and Form of Proxy Annual General Meeting 2023 Ocado Group plc. Available at: https://www.ocadogroup.com/media/4xemqfgb/2022-form-of-proxy.pdf (Accessed on: 08.05.23)
Reddy, B. and Cheffins, B., 2022. Thirty Years and Done–Time to Abolish the UK Corporate Governance Code. Available at: https://www.repository.cam.ac.uk/bitstream/handle/1810/341653/Thirty%20years%20and%20done%20time%20to%20abolish%20the%20UK%20Corporate%20Governance%20Code.pdf?sequence=3 (Accessed on: 08.05.23)
Singh, C., Lin, W. and Ye, Z., 2021. Reimagining the role, duties and liabilities of non-executive directors in 2020; 15 Years of the Companies Act 2006 and the pathway to the UK Corporate Governance Code 2018. Part One: a prelude to the current approach. International Company and Commercial Law Review, 32(1), pp.20-36. Available at: https://centaur.reading.ac.uk/110606/1/Reimagining%20the%20Role%2C%20Duties%20and%20Liabilities%20of%20Non-Executive%20Directors%20in%20the%20UK%20_%20A%20Review%20of%20the%20UK%20Corporate%20Governance%20Code%202019%20and%2015%20Years%20of%20the%20Companies%20Act%202006%20Part%20One.pdf (Accessed on: 08.05.23)
The Investment Association Camomile Court, 23 Camomile Street, London, EC3A 7LL, 2020. Available at: https://ivis.co.uk/media/13879/shareholder-priorities-for-2020-supporting-long-term-value-in-uk-listed-companies.pdf (Accessed on: 08.05.23)
Theia.org/public-register, 2023. PUBLIC REGISTER. Available at: https://www.theia.org/public-register (Accessed on: 08.05.23)
Uk.practicallaw.thomsonreuters.com, 2023. Shareholders' Rights in Private and Public Companies in the UK: Overview. Available at: https://uk.practicallaw.thomsonreuters.com/5-613-3685?transitionType=Default&contextData=(sc.Default)&firstPage=true (Accessed on: 08.05.23)
Unilever.com, 2023. UNILEVER PLC RESULTS OF ANNUAL GENERAL MEETING. Available at: https://www.unilever.com/files/356723ac-90ba-45fc-8950-fb57b6d36cd2/global-pdf-plc-agm-2023-results-announcement-03.05.23.pdf (Accessed on: 08.05.23)
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