Below are key takeaways from ISS’ recently released Europe 2021 Proxy Review. The full report is available to institutional subscribers by logging into ProxyExchange then selecting the Governance Exchange and its Report Center tab and to corporate subscribers by logging into Governance Analytics then selecting the Governance Exchange and the Report Center tab.
- Emergence of Say-on-Climate votes: Following 2020, where a number of European companies were first targeted by shareholders asking for a vote on their climate strategy, a relatively small but increasing number of companies addressed shareholder concerns and put forward such proposals by adopting a periodical advisory vote on their environmental targets, climate transition plans or similar, the so-called “say-on-climate” votes.
- Board Gender Diversity: There were further developments with regard to gender quotas in Southern Europe, where legislators in Greece established a 25 percent gender quota effective from July 2021, whereas in Portugal a gender quota of 33 percent took effect in January 2020. After success targeting gender diversity at the supervisory board level in 2016, Germany is now also targeting gender diversity at the management board level.
- Executive remuneration in light of COVID-19: Companies addressed Covid-19-related challenges differently and the approaches with respect to executive remuneration diverged not only across different markets but also between individual companies within markets or sectors. Some companies implemented temporary fixed salary cuts and/or reductions or complete waivers of variable remuneration (particularly in Spain), while examples of in-flight changes and significant use of discretionary mandates, often with insufficient rationale provided, were observed, usually associated with increased shareholder dissent on say-on-pay proposals.
- SRD II reflection in executive remuneration across Europe: The consistency of SRD II compliant disclosure practices remained limited across European markets, with some showing a slight improvement in disclosures compared to previous years (e.g. Italy, Netherlands, Sweden) but others falling significantly behind the expected level of transparency, particularly in Eastern Europe. Overall, going forward, disclosures on remuneration will need to improve in order to meet market expectations.
- Virtual meetings: Due to the ongoing pandemic situation through 2021, many companies held virtual meetings for the second consecutive year. The national legislations related to shareholder meeting formats differ, with some countries extending emergency laws, while others have created the possibility for companies to choose their meeting format as they see fit going forward.
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By Karolina Malisauskaite, Paul Guiziou
