This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

Rolls-Royce and Voting Procedures

I published a report on the Rolls-Royce Annual General Meeting (AGM) in the last ShareSoc newsletter and it is also on our Members Network. I wrote to the Chairman after the meeting complaining about his response to one of my questions where he suggested that the proxy votes were “overwhelmingly” in favour on all resolutions when one got only 87% support and another only 94% support. I pointed out that I had to ask about the figures because he was using a poll on all resolutions (no “show of hands vote”, and by using paper poll cards the figures were not disclosed until the next day). In addition the proxy votes were not disclosed as some companies do so I had to ask about them. Knowing that there were substantial votes against share allotment and against one of the directors was useful and interesting information which was being concealed from the audience. Indeed it was symptomatic of the apparent attempt by the Chairman to run the meeting as some kind of PR event for smaller shareholders rather than deal with some of the key business issues facing this company.

This is altogether unsatisfactory, but the Chairman said in the response to my letter that “they have received no other complaints” on this procedure. So if you think shareholders who attend AGMs should know what the votes are, and ideally use a “show of hands” vote first, then please write to the Chairman at this address: Mr Ian Davis, Chairman, Rolls-Royce Holdings Plc, 62 Buckingham Gate, London, SW1E 6AT. Perhaps he will then change his perception of this matter.

I addition he did not accept my complaint on the failure to disclose the targets for new pay performance awards so I have sent him a copy of our new Remuneration Guidelines which covers that point specifically on page 9 – see https://www.sharesoc.org/ShareSoc-Remuneration-Guidelines.pdf . A lot of companies are not disclosing such targets but it is certainly not best practice.

I would not be surprised to see these two issues raised at their next AGM, but more importantly perhaps for investors, the questions I posed on the reporting of orders and deliveries (and hence future profitability which is where Rolls-Royce has been substantially lacking of late) were not answered adequately either.

In essence the handling of this AGM by the Chairman was poor, and private investors who attend such meetings were short-changed. ShareSoc has published guidelines on how to run AGMs for the information of both directors of companies and shareholders attending – it is present here: https://www.sharesoc.org/How_To_Run_General_Meetings.pdf . I sent Mr Davis a copy of course.

Roger Lawson

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