RBS AGM Voting Recommendations, Remuneration and Campaign Update

ShareSoc recommend voting FOR the Shareholder Committee Resolution 27 and AGAINST Resolution 2, the Remuneration Report at the RBS AGM, which will be held on 30 May at 2pm in Edinburgh.

After two years of hard work, we are delighted to report that the RBS Board agreed to put our shareholder resolution for a Shareholder Committee on the AGM Agenda. The Shareholders Circular contains our item for discussion and resolution for a Shareholder Committee and the Board’s Statement in response on pages 17 through 21.

ShareSoc Chairman, Mark Northway, wrote to the Prime Minister, Mrs May, asking her to back our campaign, and said:

We have been greatly impressed by your commitment to improve corporate governance and to rein in the boards of UK plc. Like you, we want “a country that works for everyone, not just for the privileged few” and agree it is necessary to “get tough on irresponsible behaviour in big business”. Recent events at GKN, Aviva, Persimmon, Carillion and Conviviality all reinforce the public perception that the system is not working and that something needs to be done to improve matters.

This is the very first time that ShareSoc has written a letter to the Prime Minister and reflects the importance we place on this issue, which is fundamental to ShareSoc’s goal of ensuring that individual shareholders get treated fairly.

The RBS Board have recommended shareholders vote against the shareholder resolution. This is extremely disappointing, but not unexpected given their historic treatment of shareholders. ShareSoc Director, Cliff Weight, was quoted in the FT on 28 May “The RBS board should be listening to shareholders, not telling them how to vote [in respect of this shareholders’ resolution].”

We are (again) winning the PR war and the FT article RBS investors lobby May to restore ‘trust in British businesses’ highlighted many good points in our favour, including:


Campaigners push for shareholder committee at state-backed lender.
Investors in the state-backed lender are pushing for better governance standards. Theresa May has been urged to restore “trust in British business” by backing the creation of a shareholder committee at Royal Bank of Scotland, which investors say would drive up standards. ShareSoc, a group for small shareholders, has written to the prime minister before a vote next month on whether state-backed RBS should set up a committee to give investors more say on controversial issues such as pay. A favourable vote on this matter will be a hugely positive step for institutional and individual investors, for the London Stock Exchange and for the UK’s reputation as a centre of excellence in matters of corporate governance.


We have a multi-pronged campaign to try to win this vote, including

  1. Letter to the Prime Minister with copies to MPs, Lords and key influencers.
  2. Political meeting at Houses of Parliament, in Portcullis House on 21stMay at 3 pm. This has been organised and sponsored by Chris Philp, MP. Lord Lee has promised to try to attend. The meeting is being jointly arranged by ShareSoc and the High Pay Centre (who published the 2016 Paper on Ownerless Corporations and proposed Shareholders Committees as one part of the solution). We will invite journalists, including Attracta Mooney at the FT and Ruth Sunderland at The Mail to this. We invited RBS and they refused to attend.
  3. Fund Managers meeting at Investment Association on 4 May. The Investment Association have kindly lent us a room for this event and helped in inviting attendees.
  4. UKGI meeting on 30 April. UKGI own 70.48% of RBS and if they vote, they will most likely decide the result.
  5. Link/ICSA meeting for company secretaries of Issuers is being arranged via Caroline Evans and Tracey Brady at Link.
  6. Linked In and Press Campaign highlighting this as the 9th most important investor revolt this spring see  https://www.ft.com/content/0d6e4d5a-4256-11e8-93cf-67ac3a6482fd and  https://www.linkedin.com/feed/update/urn:li:activity:6393721322916102144
  7. RBS AGM on 30 May is the culmination of all of this.


RBS have given 3 reasons why the RBS Board oppose our resolution– (i) the difficulty of finding a group of investors that could represent the views of the many investors holding shares in large quoted companies, (ii) concerns also exist that such committees could entrench large investors, making it harder for smaller investors to have a say, and (iii) shareholder committees with strategic oversight and advance say on draft pay and nomination proposals would blur the lines between stewardship and executive decision-making, and undermine the unitary board model.

We don’t think their reasons are valid, because:

(i) Finding a group of investors willing to engage with companies was the way the old ABI investor subcommittees worked, and the way the Investor Forum works now.

(ii) Smaller institutional shareholders can be represented by the company choosing one committee member who is a smaller investor. This would be fair as collectively the smaller investors make up quite a large stake. Retail shareholders make up 12% of the UK stock market, so it is entirely right that a representative of them is also given a seat on the shareholder committee. Those who have requisitioned the resolution are small shareholders and believe this will be an improvement on the current system where they get no say.

(iii) The proposal is not in conflict with the Unitary Board concept. There is no conflict in the proposed advisory shareholder committee concept. However, Chris Philp’s proposal and the Swedish model both have specific powers for the shareholder committee. Those would have impacted on the role of the Board. By using this specious argument, the RBS Board have failed to understand/report what we have proposed. Their logic underpinning their recommendation to vote against our resolution is flawed. The terms of reference were left for the RBS Board to decide, precisely so this would not be an issue.

Recommendation to vote against the Remuneration Report Resolution 2


ShareSoc is recommending shareholders vote against Resolution 2 for the following reasons:

  • Chairman is paid unnecessarily high at £750k and owns very few RBS shares, only 41,000. His pay should be reduced to £500k p.a. and it should all be paid in shares until he owns £2m of RBS shares. This would increase his alignment with shareholders.
  • CEO receives a pension allowance of 35% of salary. His pension allowance should be the same as employees, or the max HMRC limit of pension contributions £10,000 p.a. As well as being unnecessarily high, it sends the wrong cultural message of elitism of the top team.
  • Soft targets have been set. The LTIP vesting % for the past 5 years have been 73%, 62%, 56%, 89% and 60%. The share price performance has been distinctly worse than average, but the highly complex remuneration formulae have paid out far too generously.
  • The new remuneration policy means that 30% of the CEO’s pay is in cash and 70% in shares. This is a good % split and aligns him with shareholders. In the remuneration report, there is no projection of his shareholding and potential gains from his current shareholding and those shares he is likely to receive over the next several years – 21 pages of other stuff but the most useful information is not there. So, I did some sums, which suggest he will have about 8 million shares by Dec 2023, assuming he does not sell any. If the RBS share price doubles he will have £40 million of RBS shares, if it trebles about £65 million and if it halves about £10million. This certainly creates a good alignment with shareholders! However, I think it also suggests his pay is unnecessarily high and should be reduced. Shareholders should vote against the remuneration report for this reason alone!
  • The rules on the CEO selling shares allow him to sell too early. Best practice is that directors should not sell shares until two years after they leave the company, so as to prevent any bulling up of the shares to get a good sale price. (It should be noted there is a conflict here as this is exactly what UKGI would like!)


I would like to thank all our campaign members for their support. Without your help, we could not have got this far. I shall be attending the RBS AGM and asking questions and hope to see some of you there.


Cliff Weight
ShareSoc Director and RBS Shareholder Committee Campaign Coordinator
29 April 2018

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.