Equiniti ezine | December 2011

EZINE > DECEMBER 2011 INSIDE THIS ISSUE: WEBCAST Kevin Hepburn discusses the innovative online improvements happening at Equiniti AGM SEASON 2011 – LOOKING BACK The main points from the Client Discussion Forum A MORE BALANCED FUTURE? Looking at the ongoing debate on gender diversity AND THE WINNER IS… PREMIER FOODS What it takes to run an award-winning company secretarial team

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WEBCAST

Kevin Hepburn, Head of Web, discusses the cutting edge online development being undertaken by Equiniti

WEBCAST: ONLINE DEVELOPMENT

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CLIENT DISCUSSION FORUM > ON PAGE 3

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CLIENT DISCUSSION FORUM

We look at some of the main points discussed during Equiniti’s Client Discussion Forum

AGM SEASON 2011 – LOOKING BACK The end of the year is traditionally a time for taking stock, so our December e-zine is the perfect place for a summary of last month’s AGM Update Client Discussion Forum. Hosted by Equiniti on 8th November, the forum saw representatives from 44 of Equiniti’s clients come together to look back on the 2011 AGM season – summarising voting trends, and reflecting on some of the ‘hot topics’ that have emerged.

Voting trends

A number of key trends in voting were discussed, including a continued increase in the percentage of issued share capital voted (68% in the FTSE 350 in 2011, compared to 65% in 2010) and an improvement in the trend of late voting. While electronic proxy voting is widely available, with all FTSE 100 companies and 73% of FTSE 250 companies now offering this service,

there has, disappointingly, been a mixed uptake – just under half of FTSE 100 firms have seen an average decrease of 11%, while just over half have seen an increase of 26%. A similar pattern also emerged for FTSE 250 companies, but more marked, with an average decrease of 26% for some and an average increase of 51% for others.

Interestingly, we are also seeing a decline in the number of retail shareholders – something for which the discussion group was unable to identify an underlying cause.

When it comes to voting issues, unsurprisingly, it is director remuneration which continues to be the most contentious, even if, on average, 94% of votes are ultimately cast in favour. Another issue which has received negative attention is the 14-day notice period – although it passed with little issue for the majority, this resolution did receive the lowest ‘for’ vote in 36% of the FTSE 100. In particular,

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AGM VOTING TRENDS Availability of electronic proxy voting

FTSE 100

100%

FTSE 250

73%

14-day notice period voting

FTSE 100

36%

FTSE 250

17% CONTINUED ON PAGE 4 3

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CLIENT DISCUSSION FORUM Glass Lewis recommended an ‘against’ vote on this resolution.

Board of directors

The proposal to present the full board for re-election was new for 2011, and one taken up by 90% of the FTSE 100 (compared with 61% of the FTSE 250). The discussion group also noted that Glass Lewis recommend an ‘against’ vote for any director failing to attend at least 75% of board meetings in that year – and this a possible factor for any large number of against votes. A final point of interest was board composition – with just 15% and 9% of board members female for FTSE 100 and FTSE 250 companies respectively, boardroom diversity is expected to be a hot topic for 2012.

Shareholder questions

The hottest of topics for shareholder questions continues to be remuneration. And this is the case not only for private shareholders, but, increasingly for institutional investors too – particularly where some of the performance criteria are felt to be unclear or insufficiently challenging. This issue brought up an interesting question on whether companies were engaging in dialogue with their institutional investors

ahead of the 2012 AGM season, the general consensus being that institutions were not being proactive in engaging with companies early.

Another new shareholder question for 2011 was from Fair Pensions, which is running a campaign asking chairmen to confirm that all those employed either directly or indirectly by the company are being paid ‘the living wage’. Further ‘hot topics’ included share buy backs, allotment of shares, and dividends/total shareholder return.

Communicating with shareholders

Analysis shows that most companies have now undertaken a consultation with their shareholders about electronic communications, with just over half of the FTSE 100 having also undertaken a re-consultation. A significant influence on the rates of response to these consultations is the means of posting – those sent as a standalone mailing prompted a much higher response rate (25%) than those where the consultation documents were including with AGM documentation (8%). A similar pattern – 43% to 17% – was also noted for re-consultations.

While the number of paper documents being mailed has drastically reduced over the last few

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years, this has not been followed by an increase in ad hoc requests, with the number of requests received via Equiniti comprising less than 0.3% of registers. The issue of whether companies issue both a full report and accounts and summary review, or just the summary review alone, was also raised within the discussion group, with many issuing only the former.

Equiniti is currently researching on clients who no longer issue both reports, in particular looking into how these companies manage the transition, and will circulate its findings shortly.

Into 2012

Finally, the group cast its collective eye forward to 2012, where there is continued debate over the efficiency of the proxy voting chain – including some interest at EU level.

One area in which the Commission is to focus on is that of proxy advisors, with an eye on the powerful influence they exert. Voting deadlines also continue to be discussed, with some calling for harmonisation across all member states.

IF YOU WOULD LIKE MORE INFORMATION: Please contact your relationship manager GENDER DIVERSITY > ON PAGE 5

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GENDER DIVERSITY

Sian Stokes, Assistant Company Secretary at Equiniti, looks at the ongoing debate on gender diversity

A MORE BALANCED FUTURE? In the wake of the Davies Report (‘Women on Boards’) and the Financial Reporting Council (FRC)’s review of the recommendations contained within, the spotlight in UK boardrooms remains very much on gender diversity.

As part of the FRC’s proposed changes to the Corporate Governance Code in 2012, UK companies will be obliged to include a description of the board’s policy on diversity – including gender – in their annual report. This must include any measurable objectives that it has set for implementing the policy, as well as progress made on achievement. They will also be required to consider diversity as part of their board evaluation. Whilst these changes will not take effect until 1 October 2012, the FRC is urging companies to voluntarily apply and report on the changes with immediate effect.

Indeed, whilst forward-thinking business are committed to offering more opportunities

to women, there is some concern from industry experts that businesses are not putting enough effort into developing female talent and, as such, that the targets may be difficult to meet.

Prime Minister David Cameron has made it clear that although progress has been made, he wants more businesses to step up. During a recent debate in parliament on excessive boardroom pay, Mr Cameron commented: “There’s something else that we need to do, which is to make sure that nonexecutive directors on boards are not the usual sort of rotating list of men, patting each other’s backs and increasing the level of remuneration. I want to see more women in Britain’s boardrooms, which I think

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GENDER DIVERSITY would have a thoroughly good influence”.

So, is the UK going far enough? While compulsory quotas may be unpopular, the European Union’s Justice Commissioner Viviane Reding has reiterated the possibility of them being introduced if companies do not voluntarily achieve expected boardroom equality of 30% female by 2015 and 40% by 2020.

In fact, quotas are far more common in Europe. Norway was the first to introduce them, and currently has the highest percentage of board level women in the world, at around 35%. Other European companies are following suit, with Belgium, France, the Netherlands and Spain all set to introduce quotas over the next three to six years. Italy has a slightly more complicated approach, which applies from the first renewal of the board following introduction of their ‘Gender Balance’ law, effective from August this year.

Germany, however, is similar to the UK in that they have no gender quotas imposed.

The German Corporate Governance Code was updated last year to promote better gender diversity. While there is no mandatory requirement to comply, non-compliance must be disclosed.

Belgium, France, the Netherlands and Spain are all set to introduce quotas over the next three to six years In the current climate, gender diversity is just one of many issues facing companies.

However, Viviane Reding has made it very clear that if European businesses don’t promote many more women to boards voluntarily, they may find their hands forced.

SHARE YOUR VIEWS If you would like to join the debate on boardroom diversity, we would be interested to hear from you. Email your thoughts to your relationship manager or Sian Stokes at Sian.Stokes@equiniti.com

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AWARDS

What does it take to run an award-winning company secretarial team? Simon Wilbraham from Premier Foods explains how his team earned this year’s ICSA award

AND THE WINNER IS… PREMIER FOODS When Simon Wilbraham was Deputy Company Secretary at fellow food company RHM, he used to drive past the headquarters of Premier Foods, a short distance away, before completing the marathon journey to the other side of the M25, where RHM was based. At the time, there was always one question on his mind: “Why don’t I work at Premier Foods instead?”

He moved on to become Company Secretary at property company Brixton plc before his opportunity arose. In 2007, Premier Foods acquired RHM, and Simon realised that his experience could be useful.

He contacted Premier’s Company Secretary at the time, and was appointed Deputy Company Secretary.

The subsequent 10-minute commute is a great bonus, but the big attraction for Simon is also the culture at the business, where

there is never a dull day. “It can be very challenging but it’s also part of what makes it such an enjoyable place to work.”

The past 12 months have been no different. Premier Foods, like many businesses, has faced many challenges, creating a significant workload for Simon and his team. The silver lining is that their efforts were rewarded last month as they scooped the ICSA Company Secretarial Team of the Year award.

The CoSec team is headed up by Andy McDonald, much of whose time is devoted to his role as General Counsel. As his deputy, Simon looks after the day-to-day company secretarial function. He is supported by Assistant Company Secretary Erika Norris and Company Secretarial Assistant Lisa Keeling. Key responsibilities include board support, corporate governance, producing the Annual Report, share plan administration

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From left, Erika, Simon and Lisa with the ICSA Company Secretarial Team of the Year award CONTINUED ON PAGE 7

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AWARDS and subsidiary compliance – no mean feat given that Premier Foods has more than 130 group subsidiaries.

“It’s been a difficult year for Premier,” says Simon. “We’ve had to issue a couple of trading updates and the share price has taken a bit of a pounding. We also had an exceptionally busy period with three major corporate transactions and the annual report all completed in March.

Indeed, there was one extraordinary day, 7 March, when we completed the disposal of our meat-free business, signed off a Class 1 circular for the sale of our canning business, signed off the 2010 annual report and appointed a new non-executive director all on the same day!

“Behind that, we’ve also being doing a lot of work to improve processes,” he adds. “For instance, with the annual report, we’ve been very successful in improving the narrative reporting and have been nominated for a couple of awards for disclosure.

“At the beginning of the year, we also introduced a whole new raft of executive share plans, which was a major undertaking.

We went out to our largest shareholders for a period of consultation, made some revisions accordingly, put it forward to the shareholders,

With such a busy period of corporate activity, it’s good to know we can rely on them to deliver, so there is one less thing we need to worry about.

Simon Wilbraham on Equiniti's company secretarial team

and received 97% backing – which was quite an achievement.”

The other member of the Premier Foods company secretarial team is Equiniti. “They’re our registrar, they look after our shareholders and sharesave plans. Given the Class 1 transactions at the beginning of the year, they have been very important in terms of ensuring everything has run smoothly. With such a busy period of corporate activity, it’s good to know we can rely on them to deliver, so there is one less thing we need to worry about,” says Simon.

After such a hectic, award-winning year, you might have thought Simon would be hoping for the pace to drop a little in 2012,

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but far from it. He is expecting next year to be every bit as busy – possibly more so – and is relishing the challenge. “We’re going through another period of transformation now, with a new chief executive and management team, and are hoping to announce our new strategy and plans when we publish our results in Q1 next year,” he says. “There is going to be a lot of change, but people here thrive on that.”

IF YOU WOULD LIKE MORE INFORMATION: Please contact your relationship manager CONTINUED ON PAGE 8