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Key trends in investor voting policies from the 2022 (AGM) season

Investor engagement has taken off1 . Many large investors today spend time thinking about and assessing the effectiveness of their corporate engagement. Asset owners and asset managers often formally communicate with companies through direct engagement and by voting at annual general meetings (AGMs). There are other means of engagement, however, which are worth understanding. For example, investors often publish how they intend to vote on key issues at the AGM. 

The Deloitte Global Boardroom Programme analysed voting policies of 101 large investors to highlight investor concerns for the 2022 AGM season on a selection of headline topics (see sidebar): environmental, social and governance (ESG), diversity, equity and inclusion (DEI), board composition and board independence and executive pay. The analysis revealed that institutional investors across regions are seeking disclosure on environmental issues from the companies they invest in. Intentions to vote on board diversity and independence appeared more varied across geographies. And executive remuneration continues to attract considerable scrutiny from institutional investors with many adopting say-on-pay policies.

  • 25 asset managers and owners with a significant global presence ('global investors’), considering global assets under management (AUM) with global voting policies and significant geographical balance (consisting of Canada, France, Germany, Ireland, Italy, Japan, the Netherlands, Norway, South Korea, Switzerland, the United Kingdom and the United States of America); and
  • 76 asset managers and owners with a significant local presence, considering AUM in the local stock market and having headquarters in selected markets in Australia (16), Japan (18), Italy (15), UK (15) and the US (12).

Insights from the voting policies

Climate/ESG (See Table 1)

Institutional investors are increasingly seeking more disclosure on ESG related issues, specifically climate, from the companies they invest in.

An analysis of the shareholder voting policies showed that nearly half or more of investors across Australia, the UK and the US called for reporting aligned with the Task Force on Climate-Related Disclosure (TCFD) guidelines. The level of interest in TCFD-aligned disclosures was higher among local voting policies compared to global voting policies  analysed. Over half of US investors sought disclosures of industry-specific metrics published by the Sustainability Accounting Standards Board (SASB). In contrast, only one in five global investors expected that their investee companies should follow SASB industry-specific guidance. In the UK, over half of investors asked companies to align their targets with other specific metrics, such as the Paris Agreement’s 1.5°C target. 

Both global and local investors referred to a wide range of specific ESG policies in their voting policies. These included the UN Sustainable Development Goals (UN SDG), science-based target (SBT) setting, net-zero or environment-related (e.g., water supply, greenhouse gas emissions and energy efficiency). See table 1.

Diversity, equity and inclusion (See Table 2)

Among the five countries where investor voting policies were reviewed, the UK and the US had the highest number of investors discuss diversity, equity and inclusion (DEI) in their voting guidelines. Levels of integration with voting policies varied considerably, however. 

Among the voting policies analysed, the investor policies in the US and the UK more frequently discussed the topic of gender diversity compared to the policies of global investors. Two-thirds of UK and three quarters of US institutional investors also highlighted the importance of ethnic diversity considerations in their voting policies. These investors were also far more likely to set out specific diversity targets than the global average. Just under half of global investors included in this review have voting guidelines that either expressed a specific view about gender diversity with or without a target.

Board composition and board independence (See Table 3)

Institutional investors seek to ensure that boards and their various committees act with independence. Many investors see higher levels of board independence as a sign of corporate accountability to investors and better oversight of the business.  

More than half of the voting policies published by global investors in the review referred to having a minimum number of independent (or ‘outside’) directors on the board. Among local investors, the appointment of multiple independent directors to the board featured prominently among UK investor guidelines, with three out of five of UK voting policies supporting a minimum number of independent directors—and, reflecting the principle in the UK Corporate Governance Code2. The number of local investors in Japan that require a minimum number of independent directors is even higher than that of global or UK investor voting guidelines.

Institutional investors also focused on who serves on the board’s compensation (also known as remuneration) and audit committees. About half of global investors expect those committees to be fully comprised of independent directors. UK and US voting policies more frequently set out independence requirements for the audit and compensation committees, with nearly all asking for this, reflecting the long-standing Corporate Governance Code and Stock Exchange Listing Rules respectively.  

When it comes to independence of the board chair, nearly two-thirds of global voting policies asked for chair independence and more than half of the policies opposed or expressed concern over instances where the role of CEO and board chair are held by the same person. Similarly, just over half of US-based and Australia-based investors expressed bookings about boards with a combined chair/CEO. 

Prolonged director tenure is another area of investor concern. Approximately two out of five global and UK voting policies set out expectations for the maximum tenure for independent directors. More nuanced trends on a maximum tenure period for board members were seen among investors in Japan (one in three) and the US (one in four). 

Compensation and investors: Many want more say  

Investor voting policies often included expectations relating to executive pay. In many cases, voting policies appeared to call for clarity over the board’s approach to seeking shareholder engagement around remuneration policies, including a call for a ‘say -on -pay’ vote. Over half of global voting policies expected companies to disclose details on shareholder engagement regarding pay policy proposals, the outcomes of such engagement and the board’s response to shareholder concerns. 

The emphasis on other remuneration-related topics varied across geographies. Four in 10 global voting policies appeared to draw attention to the exercise of discretion over long-term benefits or bonuses - a higher rate than local voting policies reviewed. Investors in the US, Japan, Italy and particularly in the UK commented on pension contributions. Half of US voting policies called for disclosures on retention bonus payments. Despite half of Australian voting policies calling for investor engagement on remuneration, they seldom list specific remuneration-related topic areas in their voting policies.

How investors voted: 2022 season highlights

During the 2022 AGM season3, two topics rose to the forefront: ESG-related proposals and executive pay. Here are some of the key highlights:  

Prominence of ESG-related proposals

The 2022 AGM season saw a high degree of interest in ESG-related proposals. In the US, for example, shareholders filed more than 500 resolutions on ESG matters.Among them, environment-focused resolutions were the most popular and approximately one in four of these climate change-related proposals passed with majority support5. For the first time, social proposals requesting civil rights/equity audits and reports on gender/racial pay gaps received majority support in several cases6

UK AGMs saw a rise in the number of companies putting forward voluntary “say-on-climate” resolutions - for investors to vote on companies’ climate policies - and this year’s AGM season saw a total of 16.7 During the AGM season, one company’s climate transition plan failed to achieve majority support from shareholders and four high-profile companies faced opposition to their climate transition plans from a significant minority.9 Opposing shareholders demanded more ambitious transition plans, shorter timeframes for decarbonisation and alignment of management incentives to the company’s climate strategy.10

Similar trends were seen in Australia, Italy and Japan. In Australia, where close to 60% of the largest 100 companies already follow the recommendations of the TCFD, investors’ increasing focus on ESG risks affected investors’ assessment of directors and their election/re-election11,12. Say-on-climate emerged as a new topic on AGM agendas in Italy, with one company actively asking their shareholders to vote on their climate action plan to reduce greenhouse gas emissions and transition to electricity from renewable sources13.  In Japan, the number of shareholders making climate change-related proposals has reached a historic high, increasing by 60% since 2021.14

Record backlash over executive pay 

During the 2022 AGM season, executive pay was a hot topic in multiple countries. In Italy, proposals relating to executive pay were the most contested.15  In Japan, remuneration reports were increasingly scrutinised—particularly with respect to retirement benefits—with some institutional investors opposing proposals on retirement benefits .16  A record number of Australian companies faced shareholder backlash over their remuneration reports in the 2021 AGM season, although the trend appeared to have been more muted in 2022.17  

Executive remuneration proved to be an important topic in the UK as well. 19 of FTSE100 companies received less than 90% support on their remuneration reports which was at the similar level as the previous year18.   In contrast, in the US, the overall number of shareholder proposals related to executive compensation declined from 49 in 2021 to 36 during the 2022 voting season. However, there were more proposals seeking shareholder approval of severance agreements, from two in 2021 to 16 in 2022. This was largely due to a small group of activist shareholders receiving support from nearly half of shareholders at companies where it was brought to a vote.19  This seems to reflect increasing concern about large payoffs for departing executives, similar to concerns observed in Japan.

Investor focus areas—where it’s heading    

In conclusion, shareholders appear to be doubling down on ESG-related proposals in their voting policies, particularly those related to climate change and decarbonisation. In terms of social concerns ─ the ‘S’ in ESG ─ diversity, was the standout topic, mentioned to varying degrees across almost all global and local investors, especially in the UK and US. DEI topics beyond gender equity appear to have emerged as key topics in the US and UK but are yet to become prominent topics in global and other local voting policies. 

Traditional AGM topics including board independence and composition and remuneration also attracted investor interest. Prominent topics in 2022 included the appointment of independent directors, committee membership and chair independence. Investor voting policies, both globally and locally, emphasised the importance of shareholder engagement in director remuneration such as through ‘say-on-pay’ votes and bonuses. 

As we look to the future, ESG-related topics will likely play an increasing role in the voting guidelines of both global and local investors, indicating a growing interest in the topic by investors. Moving forward, companies will likely face more demanding investors seeking to talk about an ever-widening series of topics - as well as an evolving set of investor voting guidelines which reflect the evolution of societal concerns.

End notes:

1The analysis of 2021 voting policies appeared in Deeper Engagement: Investor Behaviour in the 2021 Proxy Season.

2The Financial Reporting Council, The UK Corporate Governance Code 2018, accessed 1 February 2023. 

3AGMs generally follow the publication of annual reports with most AGMs occurring from around March through June each year. AGMs in Australia take place mostly in the latter months of the year, as their financial year ends on 30 June.

4As You Sow, the Sustainable Investments Institute and Proxy Impact (2022) “Proxy Preview (2022” (available:), Report | Proxy PreviewAs You Sow, the Sustainable Investments Institute and Proxy Impact)., accessed 1 February 2023.

5Georgeson (2022): “2022 Investor Voting Report” (available: 2022 Investor Voting Report (georgeson.com)), accessed 1 February 2023.

6Gibson Dunn (2022), Shareholder Proposal Developments During the 2022 Proxy Season, accessed 1 February 2023.

7Georgeson (2022), Georgeson 2022 European AGM Season Review, accessed 1 February 2023.

9The Investor Association, The Public Register, accessed 1 February 2023.

10Board Agenda (2022), UK leads as say-on-climate voting grows across Europe, accessed 1 February 2023.

11Australian Securities and Investments Commission, ASIC Speech-Australian -institutional-investor-roundtable 22 April 2021, accessed 1 February 2023.

12Morrow Sodali, AGM season review - key trends and lessons for FY2023, accessed 1 February 2023.

13Morrow Sodali, After remuneration, climate change is the top target for shareholders' vote, accessed 1 February 2023.

14Think ESG, 気候変動関連の株主提案、過去最多に, accessed 1 February 2023.

15Georgeson, Georgeson 2022 European AGM Season Review, as above.

16Nikkei, 報酬・役員に厳しい目 株主総会 2022, accessed 1 February 2023.

17The Reward Practice, 2022 ASX Company Reporting Season, accessed 1 February 2023.

18Georgeson, Georgeson 2022 European AGM Season Review, as above.

19Gibson Dunn, Shareholder Proposal Developments During the 2022 Proxy Season, as above.

The Deloitte Global Boardroom Programme

The Deloitte Global Boardroom Programme brings together the knowledge and experience of Deloitte member firms around the world to address critical topics of universal interest to company boards and management. Supplementing country programmes, its mission is to promote dialogue between corporations and their boards and management, investors, the accounting profession, academia and government. In addition to the publication of thought-pieces on critical topics, the Deloitte Global Boardroom Programme hosts a series of must-see webinar discussions with eminent panelists to help boards and management of global companies to stay current and challenge perceived wisdom.

For more information and to become a member, contact globalboardroomprogram@deloitte.com

This communication contains general information only and none of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms or their related entities (collectively, the “Deloitte organisation”) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No representations, warranties or undertakings (express or implied) are given as to the accuracy or completeness of the information in this communication and none of DTTL, its member firms, related entities, employees or agents shall be liable or responsible for any loss or damage whatsoever arising directly or indirectly in connection with any person relying on this communication. DTTL and each of its member firms and their related entities, are legally separate and independent entities.

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