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UK Remuneration Review 2015

 In association with Preface

Since the so called shareholder spring Now companies must also disclose the The Policy must be submitted to a of 2012, executive pay has rarely been amount each director has been paid and binding shareholder vote at least every out of the headlines. Companies must to express this as a single figure taking 3 years. now walk the tightrope of attracting account of all aspects of remuneration. and retaining their top executives in an The company must also explain on 2014 saw the vast majority of the increasingly global market place while what basis the level of variable pay FTSE350 put their Remuneration avoiding allegations of fat cats. has been set therefore linking actual Report and Remuneration Policy to a performance to remuneration. shareholder vote. For the first time it is UK Companies have had to report on possible to see how shareholders voted their Directors’ Remuneration since As before voting on the remuneration on remuneration on a binding basis and 2002 allowing shareholders a say, albeiit report is on an advisory basis only. also their views on the future direction on an advisory basis. However In 2013 of executive pay. the UK government went much further The Remuneration Policy and introduced new rules regarding the This report looks at: reporting of executive remuneration: The Remuneration Policy is a new requirement detailing how each - Voting across the FTSE350 enabling The Remuneration Report element of a directors’ remuneration individual companies to compare their package “supports the short and voting results with their peers. The Remuneration Report will continue long term strategy of the company, its - Which investors most commonly to include information on an annual potential value, and any performance voted against Remuneration Reports basis explaining how much directors measures relating to it”. It must also set and Policies and why. have been paid in the reporting year, and out a policy for paying newly recruited - A look ahead to 2015 with how the pay policy will be implemented directors and a policy for loss of office Remuneration policy changes from key in the current financial year. payments. asset managers. 

Contents UK Remuneration Review 2015

2 Preface 13 Appendix Part 1 4 Unclear messages FTSE 100 Companies 7 What the shareholders say 16 Appendix Part 2 10 The policies FTSE 250 Companies

2 Don’t leave it to chance

Proxy Insight has all the intelligence you need for a successful shareholder vote. Understanding who votes, how and why puts you in control—so don’t leave it to chance.

 www.proxyinsight.com Unclear messages Why rates of support for Remuneration Reports and Policies have become detatched, and how issuers can understand what shareholders want.

lot has been written about the conflicting messages investors sent to issuers in 2014 through their voting A patterns on executive pay. Indeed, Ecclesiastical’s Neville White told Proxy Insight earlier this year that the different outcomes for binding Remuneration Policy and advisory Remuneration Reports were at times “schizophrenic”.

Overall, however, the average rate of support across the FTSE100 was very close with 93.7% for Policy and 92.8% for Reports. Across the FTSE250, the results were exactly the same at 95.2%.

Analysis on the next two pages reviews the companies in the FTSE100 and FTSE250 with the lowest support for both resolution types.

4 FTSE100 and Astra Zeneca fared poorly in both Having approved the principles for votes – others had issues in just one executive pay, shareholders may still While Burberry was the only FTSE100 of the categories. Despite receiving a object to the actual compensation company to lose a remuneration vote, very low level of support for their Policy, planned once details are announced in a number failed to garner reasonable Standard Chartered’s Report actually proxy filings each year. Industries where support on either or both categories. received a higher than average level of returns can be highly volatile, such as The companies with the lowest support support. Likewise, Pearson’s Policy had banks, may be particularly affected. in each category are listed below while a highly respectable level of support but the full list may be found in the appendix performed poorly for the Report vote. The divergent to this report. Interestingly, while 85 outcomes for companies secured support for their These results matter, and are likely to Remuneration Remuneration Policy of 90% or more, prove confusing for issuers. Support Report and only 78 managed to reach this level in for Policies may indicate a company is Remuneration votes on their Remuneration Report. heading in the right direction but this is Policy votes have unlikely to make life easier for investor been described as While Carnival and – to an extent, relations teams trying to get their “ schizophrenic” Burberry, HSBC, Reckitt Benkiser Reports approved.

FTSE 100-Lowest support for remuneration policy

Remuneration Policy Remuneration Report

Rank Company % For Vs Avg % For Vs avg 1 Standard Chartered PLC 59.2 63 94.6 102 2 Carnival PLC 61.9 66 58.6 63 3 WM Morison Supermarkets PLC 73.5 78 89.1 96 4 HSBC Holdings PLC 79.4 85 84.0 90 5 Reckitt Benckiser Group PLC 80.2 86 68.5 74 Source: Proxy Insight

FTSE 100-Lowest support for remuneration report

Remuneration Report Remuneration Policy

Rank Company % For Vs Avg % For Vs avg 1 Burberry Group PLC 47.3 51 83.9 90 2 Carnival PLC 58.6 63 61.9 66 3 AstraZeneca PLC 61.5 66 85.0 91 4 Pearson PLC 65.8 71 95.8 102 5 BG Group PLC 67. 2 72 93.7 100 Source: Proxy Insight

5 FTSE250 Abstentions / Withheld Votes

As many as 14% of FTSE250 companies One of the less well-reported facts is failed to win 90% support for Policy in that companies understandably only 2014, while 15% failed to reach the base their results on votes cast for or same level for Report. against a proposal, effectively ignoring shareholders who choose perhaps to Yet only DS Smith fared badly on send a softer message by casting an both votes; , , ICAP Abstain or Withhold vote. and Cranswick had poor results for their Policies but high support for In some cases, this could make a their Reports, while conversely Crest significant difference to the vote. For Nicholson, and International Personal example, BP’s Report received just over Finance had good support for their 1,518 million votes (16.1%) “against”, but Reports but fared badly on their 2,218 million votes were withheld.  Policies. Again, the worst performers are highlighted in a table at the end of this report.

FTSE 250-Lowest support for remuneration policy

Remuneration Policy Remuneration Report

Rank Company % For Vs Avg % For Vs avg 1 Investec PLC 56.0 59 90.0 95 2 Hiscox PLC 58.0 61 97.1 102 3 ICAP PLC 67.4 71 99.8 105 4 72.8 76 100.0 105 5 Smith (DS) PLC 77.1 81 81.9 86 Source: Proxy Insight

FTSE 250-Lowest support for remuneration report

Remuneration Report Remuneration Policy

Rank Company % For Vs Avg % For Vs avg 1 Holdings PLC 61.6 65 94.6 99 2 International Pearson Finance PLC 63.3 67 97.1 102 3 Group PLC 64.0 67 88.5 93 4 Tullett Prebon PLC 64.5 68 88.1 93 5 SVG Capital PLC 65.0 68 99.0 104 Source: Proxy Insight

6 Would you make the right moves?

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• Profiling the activist

• Assessing the voting risk of the institutions and proxy advisors’ influence

• Weighing up the influence of the retail holders

• Crafting and delivering the message to activate the right investors and drive votes

Let us prepare your activist strategy: Cas Sydorowitz [email protected] +44 (0) 870 703 0302 www.georgeson.com

A COMPUTERSHARE COMPANY What the shareholders say A look at the key determinants of voting decisions, with the corporate governance teams of the most stringent institutional investors.

Remuneration Reports Top 10 Investors opposing Remuneration Reports 2014 Investors represented on Proxy

Insight’s database supported Aviva Investors 48 35 17 management in votes on Remuneration PGGM Investments 54 45 1 Reports an average of 83.5% of the RPMI 63 20 17 time, across the FTSE350 in 2014. Only 5 investors – Quantitative Management Ecclesiastical Investment 68 25 7 Associates, Ignis Asset Management, APG (Stichting PF ABP) 70 16 14

Aerion Fund Management, Putnam Threadneedle Investments 70 17 13 and Parametic Portfolio Associates F&C Asset Management 73 23 4 (voting over 50 times) supported every Florida State Board 75 25 such resolution. Goldman Sachs AM 79 12 9

The Remuneration Report therefore Dimensional Fund Advisors 79 12 9 continues to be a contentious issue, % For % Against % Abstain with many shareholders unconvinced that current rewards are suitably linked Figure 1 Source: Proxy Insight to the performance of the companies themselves. The investors with the highest level of opposition are shown The lack or limits of appropriate approve, they are not averse to making in Figure 1. linkages between compensation their views felt. For Aviva, Burberry falls and performance is a common in to this camp, as does WPP. Aviva is the most aggressive investor, theme in discussions with Corporate supporting less than half of all Governance teams and unsurprisingly Dutch Pension fund PGGM voted Remuneration Reports it voted for. features highly in Aviva’s rationale. against 45% of all their Remuneration Helpfully, Aviva disclose the rationale Recent press coverage on WPP and Report votes, the highest of our survey. for their voting and so it is possible Standard Chartered, both of whom PGGM also provide detailed rationale to categorise the reasons for their have seen big increases in executive for their voting decisions and while opposition, as seen in Figure 2 (see pay, is of interest here. While many there are many company specific overleaf.) WPP shareholders—although not issues raised a number of issues including Aviva—are relaxed about the commonly occur: Nearly half of all Aviva’s opposition to package Sir Martin Sorrell recieves due Remuneration Reports was due, at to the company’s recent performance, • Insufficient Disclosures—82% (of least in part, to a lack of disclosure. In the same cannot be said of Peter votes against) some cases, this means a general lack Sands at Standard Chartered after a • Not Sufficiently Stretching—13% of detail is included in the Reports, while series of profit warnings at the bank. • Not linked to performance—9% a more specific recurring theme is a lack • Corresponding poor performance of of information regarding retrospective However, it is worth noting that a further business—9% bonus awards. Either way, Aviva clearly critical factor in Aviva’s considerations • Pay is high relative to peers—7% believes pay awards are being made is whether pay levels are simply without adequate rationalisation on the excessive. If the pure quantum of Commenting on our results, Marcel part of remuneration committees. the package is too high for them to Jeucken, Managing Director Key issues causing Aviva to oppose Remuneration Reports

Lack of Disclosure 49% Lack/Low Performance link 43% Excessive Actual/Potential Pay Level 37% Lack of Retrospective Disclosure on Bonus Awards 31% Inappropriate Discretionary Payments 16% Generous Pension 15% Undue Ratcheting up of pay 14% No Limits Under Incentive Schemes 10% Lack of Claw-back Policy 7% Inappropriate Service Contracts 6% Lack of Independence on Committee 5%

Figure 2 Source: Proxy Insight

Responsible Investment at PGGM The top US public pension and size, and utilises several external Investment said: fund, Florida State Board of compensation models (e.g., ISS, Glass Administration (SBA) provided Proxy Lewis, and Farient Advisors). “Voting against proposals is not Insight with some of the key criteria it something PGGM takes lightly. PGGM applies when voting on remuneration. Remuneration Policy is however very pleased that in the Mike McCauley, its Senior Officer for UK shareholders can vote on both Investment Programs & Governance, For all investors in the Proxy Insight remuneration policies and reports highlighted these points: database in 2014, the average support as this significantly strengthens the for Remuneration Policy across the system of proper checks and balances. • SBA voting on FTSE companies is FTSE350 was 88.5%, five percentage The UK is a pioneer on this issue and similar to other developed markets and points higher than the average support we believe it can (and will) improve generally in line with its overall global for the Remuneration Report. Eight remuneration practices over time.” voting statistic of approximately 20% to investors supported every resolution 25% votes against. they voted on, including TIAA-CREF RPMI has been a leading driver in • Poor disclosure surrounding and Ignis Asset Management. promoting longer term remuneration performance objectives, award targets around remuneration. It is thresholds, and key structural features As a binding resolution, the level therefore of little surprise to see it at of any existing/proposed equity plans. of opposition is lower than for third place in our rankings. Remuneration Report. However, there is still significant opposition from key Ecclesiastical Investment Voting against investors, as seen in Figure 3 (see Management has also been a vocal proposals is overleaf.) player on the subject of executive not something pay. Commenting on our study, the PGGM takes Fidelity Worldwide took a much investor’s Head of SRI, Neville White, lightly” tougher stance on Remuneration for stated: the 2014 proxy season, citing concerns “• Sufficient transparency is necessary around the lack of long-term structure “We are gratified by these results to fully understand how short/long term in executive pay. Trelawny Williams, as they suggest our rigorous policy incentive plans have been designed Global Head of Corporate Finance at against supporting excessive awards and have worked. Fidelity, commented on our analysis as disconnected from long-term, superior • SBA prefers to see a strong follows: outperformance is firmly integrated performance orientation embedded into our voting outcomes. Among within compensation framework, with “Our votes against management were the top UK companies (FTSE30) we high correlation between financial a consequence of our campaign to find it increasingly difficult to support performance, total compensation, extend LTIP retention periods to five executive remuneration packages, and total stock returns (and votes years. We are not proud of having had and these results show that in around accordingly). to vote against so many companies but half of FTSE350 cases we have been • It also examines compensation on on the plus side it has led to significant unable to support management”. a relative basis, adjusting for industry and continuing change on the ground

9 with over 50 FTSE companies now Top 10 Investors opposing Remuneration Policies 2014 having an LTIP share retention period of over three years, up from only 13 Fidelity Worldwide 43 54 3 two years ago.” Ecclesiastical Investment 53 32 15

Aviva Investors 56 26 18 Of additional interest is that Fidelity is RPMI 59 22 19 the only investor to actually vote against either of the remuneration categories F&C Asset Management 76 21 3 as opposed to a combination of against PGGM Investments 77 22 1 and abstain votes. APG (Stichting PF ABP) 79 12 9

Threadneedle Investments 80 10 10 Aviva applies much the same concerns Florida State Baord 80 20 for its votes against Remuneration Policy as for its votes against Reports Dreyfus Corp. 84 11 5

(Figure 4.) However, in a reversal of its % For % Against % Abstain priorities, excessive potential pay is its highest concern when deciding how Figure 3 Source: Proxy Insight to vote on policies. The lack of bonus deferral shows Aviva’s concerns that Report versus Policy Chartered had very poor support for companies are not being long-term its forward looking Policy, though enough in their planning of variable The different approaches investors its Report received a slightly above pay. In addition, Aviva also believes take to Remuneration Reports and average level of support compared certain boards are seeking too much Policies continues to surprise and to the wider FTSE100. Conversely, discretion to determine remuneration, enliven the debate around executive Burberry’s Report failed, while its rather than seeking shareholder compensation. But why should this be Policy received reasonable, albeit approval. Linked to this point is the lack so? True, one is historic, while the other below average, support. of suitable clawback should a reward is forward looking. One is advisory prove to be inappropriate as a result of and the other binding. But should In terms of actual voting, three Dutch future losses. there really be any difference between pension funds—PGGM Investments, investors’ voting on the two? Tandtechniek Stichting Pernsioenonds The final issue raised by Aviva is the lack and BPL Pensioen—opposed over 20% or limit of a shareholding requirement. This report suggests investors take more Remuneration Reports than they The investor remains a supporter a slightly more aggressive stance did for Remuneration Policies. Conversely of requiring executives to think more on Reports than they do on Policies, while Fidellity Worldwide opposed 57% of long-term and increase their linkage to although in reality there seems little Policies this fell to only 13 % for Reports. the wider shareholder base by owning difference at an aggregate level. Most Likewise Ecclesiastical’s opposition was stock in the company they manage. variations appear to be peculiar to 47% and 32% for Policies and Reports each company; for example, Standard respectively. 

Key issues causing Aviva to oppose Remuneration Reports

Excessive Actual/Potential Pay Level 30% Lack Bonus Deferral 29% Too Much Discretion 26% Low/No Shareholding Requirement 16% Lack of Disclosure 16% Lack of Claw-Back Policy 16% Lack/Low Performance Link 13% Inappropriate Service Contracts 11% Uncapped Bonus 11% Too Short Term 7% Figure 4 Source: Proxy Insight The policies Here, we review how voting policies are changing for a number of significant investors

Aviva: A new policy includes requests negative aspects of the remuneration CPPIB: A new policy cautions against for annual disclosure of the remuneration policy include remuneration that is the use of external peer benchmarking policy table within the remuneration disproportionate relative to the evolution as it could lead to an escalation in report. It also includes requests of its employees’ median remuneration. executive pay, unsupported by company for identifiable limits to executive For approving short-term remuneration, performance. The new policy also compensation, as Aviva is unlikely to BNP’s new policy adds requirements for expands the investor’s clawback policy support compensation without limits. the disclosure of rules for formulating to include other performance metrics, as Furthermore, the new policy indicates short-term remuneration and well as misstated financial results. support for companies that are performance criteria of short-term accredited as paying the living wage, remuneration. The new policy adds F&C: Its new policy expands on and expands and clarifies the investor’s clawback and performance disclosure performance metrics and talks about ideal clawback provision to include requirements for long term remuneration. reputational and regulatory risks for performance adjustment or post-vesting companies and industries where pay clawback. SBA will vote levels were seen by regulators, investors for proposals to and the general public as excessive and BlackRock: Its new policy has a more ratify or renew insufficiently aligned with performance. detailed explanation of BlackRock’s management/ say on pay analysis—where its old profit sharing contact Florida SBA: The new policy says the policy says say on pay votes are with other companies SBA will vote for proposals to ratify likely to correspond with votes on “ or renew management/profit-sharing the directors who are compensation contracts with other companies (in committee members, the new policy CalSTRS: The pension fund’s old which the company retains or gains explains the following preferences in policy says that additional forms of management control over the other). It compensation: disclosure; long-term; compensation such as retirement also expands and clarifies the investor’s not solely formulaic; explanation of benefits are not warranted for director views on golden parachutes. unusual structure; avoid benchmarking; compensation. The new policy explains good peer selection; no arbitrary limits; that this is because this kind of benefit Glass Lewis: The proxy adviser’s new no preference for specific plan; and could create perverse incentives. An policy has a section on risk-taking in responsive to shareholders. The policy old policy says the Audit Committee its opening paragraph. It also includes also explains BlackRock’s engagement should receive greater compensation implementation and effectiveness as process when it has concerns about than other Board Committees, while criteria for its “say on pay” review. The executive compensation. the new policy doesn’t mention this. new policy includes a section on one-off awards and expands on the following BNP Paribas: Its new approach Charles Schwab: Used to simply points: clawback; compensation expands requirements for a company’s follow Glass Lewis, but now has its consultants; golden parachutes; and remuneration policy to include: an own policy, which is used in addition employee stock purchase plans. explanation of the philosophy of the to the Glass Lewis policy and remuneration policy; the link with includes: advisory vote on executive ISS: A new scorecard is used to evaluate strategy and HR policy; the split between compensation; equity awards plans; equity plans. Rather than listing pass the different remuneration mechanisms employee stock purchase plans; and and fail requirements, the scorecard is chosen; long-term plan with extra- the repricing of options. designed to give a more balanced review financial performance metrics. New of equity plans.

11 Janus: The old policy says Janus will excessive and out of line with pension from 20% to 15%. The new policy generally vote against plans where the benefits awarded to employees, and also gives more detail and specifics proposed cost of an equity-based-plan expands the approach to performance on retirement plans and severance is above the allowable cap determined periods from a hard requirement for “a payments. by the proxy adviser. The new policy minimum of three years” to “preferably adds that the investor will also vote for five years”. It also adds a section on T. Rowe Price: An old policy says “against” if plan’s features and grant additional post-vesting holding periods votes against bank bonuses are likely, practices are misaligned with the and adds a minimum credit quality while the new policy has no mention of maximising of shareholder value. performance requirement. them. An old policy says the investor will generally vote for Section 162(m) OTPP: The investor’s new policy SWIB: The old policy says SWIB will proposals. Their new policy adds unless expands “say on pay” guidelines, and evaluate the link between pay and evergreen provisions are present. aligns pay with performance. It also lists performance by reviewing proxy certain trigger points that could result materials. The new policy details Union Investment: The new policy in an “against” vote on say on pay. performance evaluation criteria that includes a request for key ‘non-financial’ The new policy changes the wording SWIB considers positive and negative performance indicators and requests of disclosure requirements from hurdle and its position on non-performance quantifiable limits and disclosure for rate to vesting conditions. based compensation. The old policy remuneration. It takes a critical view of says plans that are not clear or lack retrospective improvements to existing Royal : A new policy says the specific information on which to share-option schemes or performance investor will vote against a remuneration determine pay and performance links measures that make it easier to achieve policy if it has concerns with how are typically not supported. The new specified targets. remuneration is structured or if the policy policy details exactly what must be allows for excessive remuneration. The disclosed (e.g. Performance targets; new policy adds that Royal London Financial Metrics; Compensation drivers will vote against the remuneration etc.). The acceptable level of dilution for policy when pension payments are compensation plans has been revised

So what?

Companies that successfully passed issues with staff, customers and Removing any obstacles to shareholder both remuneration votes, even by small suppliers, as well as with shareholders. support is surely a no-brainer for margins, may be tempted to think that Investor Relations teams. this year’s focus on compensation will Increasing Investor scrutiny – The not have long-term consequences and voting behaviour of investors is under Activism – Low levels of shareholder continue broadly as they are. However, greater scrutiny than ever before and the support is a key screening tool used by the following risks illustrate why this may need to be shown to be good stewards Activist investors when selecting new be a poor decision: is of paramount importance. In addition, targets. Indeed, it is no coincidence many shareholders are introducing that Marathon Partners chose to Bad PR – Burberry, Standard more stringent rules on what forms of nominate three directors to the board of Chartered, Barclays and others all remuneration are acceptable. US issuer Shutterfly, after the company received negative press coverage received just 50.01% support for its over pay practices. More than merely Competition for Capital – In a global Remuneration Report last year.  embarrassing these companies, the equity market, issuers must compete negative coverage will no doubt cause with numerous other sources of capital.

12 Appendix

Part 1: FTSE 100 Companies

Remuneration Policy Remunerartion Report Company % FOR Vs Avg % FOR Vs Avg 3i Group PLC 98.1 105 98.5 106 Aberdeen Asset Management PLC 86.3 92 88.8 96 Admiral Group PLC 98.5 105 99.6 107 PLC 96.7 103 98.7 106 94.6 101 94.9 102 Antofagasta PLC 91.8 98 97.4 105 ARM Holdings PLC 97.6 104 97.5 105 Ashtead Group PLC 96.8 103 69.8 75 Associated British Foods PLC 90.6 97 94.0 101 AstraZeneca PLC 85.0 91 61.5 66 Aviva plc 96.9 103 98.1 106 Group PLC 98.9 106 99.7 107 BAE Systems PLC 93.0 99 93.2 100 Barclays PLC 93.2 100 76.0 82 Barratt Developments PLC 99.0 106 99.3 107 BG Group PLC 93.7 100 67.2 72 BHP Billiton PLC 1 97.2 104 98.2 106 BP PLC 96.4 103 83.9 90 British American Tobacco PLC 90.5 97 95.3 103 British Land Co PLC 97.3 104 97.2 105 BT Group plc 96.9 103 99.1 107 Bunzl PLC 97.8 104 97.8 105 Burberry Group PLC 83.9 90 47.3 51 PLC 94.5 101 90.9 98 Carnival PLC 61.9 66 58.6 63 PLC 96.1 103 98.3 106 Coca-Cola HBC AG 81.5 87 85.9 92 PLC 97.8 104 99.1 107 CRH PLC 95.2 102 98.1 106 Diageo plc 97.5 104 97.0 104 Direct Line Insurance Group PLC 97.6 104 98.1 106 PLC 2 90.7 97 91.4 98

13 easyJet PLC 55.0 59 55.5 60 Experian PLC 87.4 93 85.9 93 Fresnillo PLC 99.7 106 100.0 108 Friends Life Group Ltd 96.9 103 98.1 106 G4S PLC 98.4 105 98.3 106 GKN PLC 97.8 104 99.3 107 GlaxoSmithKline PLC 97.4 104 98.5 106 Plc 97.9 105 99.1 107 PLC 97.1 104 97.8 105 Hargreaves Lansdown PLC 98.4 105 93.0 100 HSBC Holdings plc 79.4 85 84.0 90 Imperial Tobacco Group PLC 88.0 94 92.6 100 InterContinental Hotels Group PLC 90.9 97 94.0 101 International Consolidated Airlines Group SA 0 86.0 93 Intertek Group PLC 98.4 105 97.1 105 Intu Properties PLC 99.8 107 99.7 107 ITV PLC 96.0 103 77.5 83 Johnson Matthey PLC 97.6 104 99.1 107 Kingfisher PLC 98.9 106 99.7 107 Land Securities Group PLC 99.1 106 99.7 107 Legal & General Group PLC 97.6 104 98.7 106 Plc 98.0 105 87.3 94 Group PLC 94.9 101 96.9 104 Marks & Spencer Group PLC 98.3 105 99.2 107 PLC 99.0 106 99.8 107 Mondi PLC 98.1 105 99.0 107 96.3 103 99.0 107 Next PLC 97.9 105 99.6 107 Old Mutual PLC 97.2 104 97.0 105 Pearson Plc 95.8 102 65.8 71 Persimmon PLC 90.8 97 93.2 100 Prudential PLC 91.9 98 94.5 102 Randgold Resources Ltd 97.9 105 89.9 97 Reckitt Benckiser Group PLC 80.2 86 68.5 74 Reed Elsevier PLC 93.8 100 89.1 96 PLC 1 94.8 101 97.2 105 Rolls-Royce Holdings plc 96.3 103 94.2 101 Royal Bank Scotland plc (The) 99.7 106 99.8 108 PLC (A) 92.9 99 93.3 101 Royal Mail PLC 96.5 103 99.7 107 RSA Insurance Group PLC 96.9 103 99.7 107 SABMiller PLC 92.3 99 95.4 103 Sage Group (The) PLC 95.0 101 96.2 104 Sainsbury (J) PLC 99.2 106 99.5 107

14 Schroders PLC 92.2 98 94.2 102 Severn Trent PLC 97.7 104 99.4 107 Shire PLC 94.7 101 97.0 104 Sky PLC 93.0 99 86.2 93 Smith & Nephew PLC 93.5 100 98.0 106 Smiths Group PLC 95.0 101 93.6 101 Sports Direct International PLC 87.5 93 97.9 105 SSE PLC 99.1 106 97.6 105 St. James’s Place PLC 99.9 107 100.0 108 Standard Chartered PLC 59.2 63 94.6 102 Standard Life PLC 95.8 102 97.7 105 Taylor Wimpey PLC 98.2 105 99.4 107 Tesco PLC 97.5 104 98.6 106 PLC 93.3 100 96.6 104 TUI Travel PLC 97.6 104 99.4 107 PLC 90.8 97 92.1 99 Unilever PLC 97.5 104 99.1 107 Group PLC 98.5 105 99.4 107 Vodafone Group Plc 96.0 102 97.3 105 PLC 99.6 106 99.8 108 Whitbread PLC 99.4 106 99.1 107 Wm Morrison Supermarkets PLC 73.5 78 89.1 96 Wolseley PLC 93.6 100 98.4 106 WPP PLC 81.9 87 81.8 88

Average 93.7 92.8

Notes: 1 As dual listed companies Rio Tinto PLC and BHP Billiton PLC had Remuneration Report votes for both UK and Austalian law. The UK law vote was used for this analysis 2 Data shown was for Carphone Warehouse PLC

15 Appendix

Part 2: FTSE 250 Companies

Remuneration Policy Remuneration Report Company % FOR Vs Avg % FOR Vs Avg PLC 2 99.9 105 Aberforth Smaller Companies Trust Plc 100.0 105 100.0 105 Acacia Mining PLC 98.4 103 85.4 90 PLC 91.6 96 91.8 96 Al Noor Hospitals Group PLC 98.2 103 100.0 105 Alent PLC 96.8 102 99.4 104 PLC 89.2 94 93.8 99 Allied Minds PLC 3 0 0 PLC 81.3 85 88.4 93 Amlin PLC 97.6 103 98.9 104 AO World plc 99.6 105 99.4 104 PLC 82.2 86 99.0 104 AVEVA Group PLC 97.3 102 96.6 101 PLC 97.2 102 92.2 97 Bank of Georgia Holdings plc 91.9 97 93.6 98 PLC 96.3 101 96.3 101 Barr (A G) PLC 96.8 102 99.5 105 BBA Aviation PLC 95.1 100 99.4 104 Beazley PLC 98.2 103 83.3 88 PLC 97.7 103 98.5 103 Berendsen PLC 99.3 104 99.3 104 Berkeley Group Holdings (The) PLC 95.9 101 91.6 96 Betfair Group PLC 99.8 105 68.1 72 BH Macro Ltd 2 0 99.9 105 PLC 99.7 105 99.5 104 BlackRock World Mining Trust plc 99.7 105 99.8 105 BlueCrest AllBlue Fund Ltd 4 0 0 PLC 96.1 101 98.5 104 Booker Group PLC 98.4 103 99.1 104 Bovis Homes Group PLC 96.6 102 95.5 100 Holdings plc 96.5 101 96.6 101 BRIT PLC 3 0 0

16 British Empire Securities and General Trust 2 0 99.5 104 PLC 1 97.9 103 99.1 104 Brown (N) Group PLC 95.9 101 81.5 86 BTG PLC 95.1 100 99.3 104 Bwin.party digital entertainment plc 83.2 87 86.5 91 Cable & Wireless Communications PLC 97.3 102 89.9 94 PLC 98.1 103 99.3 104 PLC 99.8 105 99.8 105 Capital & Counties Properties PLC 80.3 84 78.7 83 Card Factory PLC 3 0 0 Carillion PLC 96.1 101 95.7 101 Catlin Group Ltd 98.4 103 89.6 94 PLC 2 0 74.0 78 Group PLC 86.5 91 71.1 75 City of London Investment Trust PLC 98.7 104 98.6 104 PLC 92.5 97 89.0 93 CLS Holdings PLC 82.4 87 91.1 96 Cobham PLC 98.4 103 97.1 102 Colt Group SA 94.9 100 98.1 103 PLC 99.7 105 99.6 105 Countrywide plc 95.2 100 99.5 105 Cranswick PLC 72.8 76 100.0 105 Crest Nicholson Holdings plc 94.6 99 61.6 65 Croda International PLC 98.2 103 98.3 103 CSR PLC 93.7 98 94.8 100 Daejan Holdings PLC 97.9 103 99.5 105 Dairy Crest Group PLC 96.0 101 93.5 98 DCC PLC 98.9 104 99.2 104 De La Rue PLC 98.8 104 99.8 105 Debenhams PLC 98.7 104 99.8 105 PLC 98.3 103 99.8 105 PLC 99.5 105 98.1 103 Dignity PLC 98.2 103 99.0 104 93.8 98 99.6 105 Domino Printing Sciences PLC 97.8 103 96.4 101 Domino’s Pizza Group PLC 98.4 103 99.5 104 PLC 94.1 99 82.7 87 PLC 98.7 104 99.2 104 Investment Trust Plc 98.9 104 99.1 104 Electra Private Equity PLC 99.7 105 99.7 105 PLC 99.3 104 99.3 104 PLC 97.5 102 97.0 102 Enterprise Inns PLC 99.8 105 99.3 104 Entertainment One Ltd 90.4 95 99.7 105

17 PLC 96.7 102 97.9 103 Group plc 99.0 104 99.9 105 Euromoney Institutional Investor PLC 88.6 93 92.2 97 Evraz plc 99.3 104 99.4 104 F&C Commercial Property Trust Ltd 99.9 105 99.9 105 Fidelity China Special Situations PLC 99.3 104 99.4 104 PLC 99.1 104 99.3 104 Fidessa Group PLC 99.6 105 99.9 105 FirstGroup PLC 89.0 93 74.5 78 Fisher (James) & Sons PLC 98.2 103 99.3 104 Foreign & Colonial Investment Trust 92.7 97 93.0 98 Galliford Try PLC 98.1 103 99.5 104 Game Digital Plc 1 100.0 105 100.0 105 Genesis Emerging Markets Fund PLC 5 0 0 99.4 104 99.0 104 Go-Ahead Group (The) PLC 97.1 102 97.9 103 PLC 98.2 103 99.9 105 88.7 93 92.5 97 PLC 96.7 102 98.1 103 Group PLC 1 98.8 104 99.1 104 Greene King PLC 95.8 101 99.5 105 PLC 98.0 103 99.9 105 Halfords Group PLC 97.0 102 99.3 104 Halma PLC 99.0 104 99.7 105 Hansteen Holdings plc 92.9 98 98.1 103 92.6 97 98.6 104 Hellermanntyton Group PLC 95.4 100 98.2 103 Henderson Group PLC 89.7 94 72.2 76 HICL Infrastructure Company 2 0 98.2 103 Hikma Pharmaceuticals PLC 92.5 97 98.7 104 Hiscox Ltd 58.0 61 97.1 102 Home Retail Group PLC 94.9 100 98.8 104 PLC 90.5 95 93.9 99 Howden Joinery Group PLC 98.4 103 98.8 104 91.5 96 98.4 103 ICAP PLC 67.4 71 99.8 105 IG Group Holdings PLC 96.1 101 99.5 104 IMI PLC 95.9 101 98.9 104 96.5 101 97.3 102 PLC 3 0 0 Infinis Energy Plc 97.8 103 98.9 104 Informa PLC 93.9 99 98.6 104 Inmarsat PLC 96.7 102 98.4 103 Intermediate Capital Group PLC 79.9 84 77.3 81

18 International Personal Finance PLC 97.1 102 63.3 67 International Public Partnerships Limited 5 0 0 Interserve PLC 98.2 103 99.0 104 Investec PLC 56.0 59 90.0 95 IP Group PLC 99.9 105 99.9 105 Jardine Lloyd Thompson Group PLC 97.1 102 97.7 103 JD Sports Fashion PLC 95.5 100 86.4 91 Jimmy Choo PLC 3 0 0 John Laing Infrastructure Fund 5 0 0 JPMorgan American Investment Trust 99.7 105 99.7 105 JPMorgan Emerging Markets Inv Trust 99.7 105 99.8 105 PLC 96.9 102 99.8 105 Just PLC 3 0 0 Just Retirement Group PLC 97.4 102 90.1 95 Kaz Minerals PLC (was Kazakhmys PLC) 99.3 104 86.9 91 Keller Group PLC 97.9 103 99.5 105 Kennedy Wilson Real Estate plc 5 0 0 Kier Group PLC 98.9 104 88.5 93 Ladbrokes PLC 98.0 103 99.5 105 Laird PLC 94.7 100 98.0 103 Ltd 90.1 95 69.9 73 Corporation 99.8 105 99.7 105 LondonMetric Property PLC 98.8 104 94.8 100 Lonmin PLC 82.8 87 89.4 94 PLC 96.5 101 96.5 101 Marston’s PLC 97.3 102 99.8 105 Melrose Industries PLC 77.4 81 95.8 101 Mercantile Investment Trust 99.7 105 99.7 105 Merlin Entertainments plc 99.4 104 99.8 105 Michael Page International PLC 98.7 104 98.2 103 International PLC 90.6 95 73.4 77 Millennium & Copthorne Hotels PLC 99.1 104 99.9 105 Mitchells & Butlers PLC 1 99.3 104 99.9 105 Group PLC 98.8 104 71.9 75 Moneysupermarket.com Group PLC 95.0 100 95.1 100 99.7 105 99.8 105 Morgan Advanced Materials PLC 97.8 103 99.6 105 Murray International Trust PLC 99.1 104 99.3 104 National Express Group PLC 88.5 93 64.0 67 NB Global Floating Rate Income Fund 2 0 99.7 105 NMC Health PLC 97.5 102 100.0 105 Northgate PLC 95.2 100 94.4 99 Nostrum Oil & Gas PLC 3 0 0 Ocado Group PLC 87.2 92 80.0 84

19 PLC 98.9 104 74.2 78 PLC 98.8 104 99.6 105 Pace PLC 91.2 96 87.3 92 Paragon Group of Companies (The) PLC 91.4 96 93.7 98 PayPoint PLC 97.7 103 99.8 105 PLC 97.1 102 95.8 101 Perpetual Income and Growth Investment Trust Plc 99.7 105 99.7 105 97.9 103 97.7 103 Petra Diamonds Ltd 95.3 100 100.0 105 Ltd 77.5 81 98.4 103 Group Plc 99.2 104 100.0 105 Phoenix Group Holdings 84.7 89 81.0 85 PLC 96.4 101 99.4 104 Polar Capital Technology Trust 99.4 104 99.3 104 Polymetal International plc 99.8 105 99.8 105 Poundland Group Plc 91.8 96 99.9 105 Premier Farnell PLC 95.4 100 98.0 103 PLC 86.1 90 98.6 104 Provident Financial PLC 96.0 101 96.0 101 PZ Cussons PLC 87.4 92 99.5 104 QinetiQ Group PLC 84.7 89 99.4 104 Rank Group (The) PLC 92.1 97 90.0 95 plc 95.7 101 84.2 88 Redefine International plc 1 99.7 105 99.8 105 95.3 100 90.5 95 Regus PLC 99.6 105 98.3 103 86.4 91 97.1 102 Rentokil Initial PLC 96.1 101 99.5 104 Restaurant Group (The) PLC 99.2 104 99.5 105 REXAM PLC 97.1 102 98.4 103 Rightmove PLC 98.6 104 99.8 105 RIT Capital Partners PLC 99.2 104 99.7 105 Riverstone Energy 5 0 0 PLC 96.6 102 98.6 104 RPC Group PLC 97.8 103 99.5 105 RPS Group PLC 89.7 94 94.6 99 Saga PLC 3 0 0 PLC 99.7 105 99.6 105 Scottish Investment Trust 96.6 101 96.7 102 Scottish Mortgage Investment Trust plc 99.5 105 99.5 105 Segro PLC 98.6 104 95.6 100 Senior PLC 97.6 103 96.5 101 Group PLC 98.1 103 99.6 105 98.7 104 98.9 104

20 SIG PLC 99.7 105 99.6 105 Smith (DS) PLC 77.1 81 81.9 86 SOCO International PLC 98.4 103 98.7 104 PLC 98.2 103 99.1 104 Spirax-Sarco PLC 98.5 103 99.4 104 Group PLC 3 0 0 Spirit Pub Company PLC 99.3 104 99.6 105 SSP Group PLC 1 92.4 97 98.0 103 St Modwen Properties PLC 98.8 104 98.0 103 Stagecoach Group PLC 95.5 100 99.7 105 SuperGroup PLC 93.7 98 91.5 96 SVG Capital PLC 99.0 104 65.0 68 Synergy Health PLC 97.7 103 98.9 104 plc 93.0 98 97.1 102 TalkTalk Telecom Group PLC 93.7 98 97.3 102 Tate & Lyle PLC 97.9 103 98.8 104 Ted Baker PLC 97.2 102 99.8 105 Telecity Group PLC 97.8 103 99.3 104 PLC 79.8 84 98.7 104 Temple Bar Investment Trust Plc 0 0 Templeton Emerging Markets Investment Trust 99.8 105 99.8 105 Thomas Cook Group PLC 98.9 104 99.6 105 TR Property Investment Trust 97.8 103 98.3 103 TSB Banking Group PLC 3 0 0 Tullett Prebon PLC 88.1 93 64.5 68 UBM PLC 95.8 101 99.3 104 UDG Healthcare PLC 99.1 104 87.6 92 UK Commercial Property Trust Ltd 5 0 0 Holdings PLC 98.0 103 99.6 105 UNITE Group PLC 99.8 105 98.9 104 PLC 99.3 104 93.3 98 97.9 103 99.4 104 PLC 97.7 103 98.1 103 Wetherspoon (J D) PLC 99.9 105 99.7 105 WH Smith PLC 1 98.6 104 98.6 104 PLC 97.7 103 99.3 104 PLC 98.3 103 98.7 104 Wood Group (John) PLC 97.7 103 99.4 104 PLC 99.3 104 99.3 104 Worldwide Healthcare Trust PLC 97.1 102 98.3 103 WS Atkins PLC 89.5 94 91.1 96 Zoopla Property Group PLC 1 99.5 105 100.0 105

Average 95.2 95.2

21 Notes: 1 2015 data used as Rem Policy included 2 No Rem Policy in 2014 and meeting not yet occurred in 2015 3 New Issue - no AGM yet 4 No Rem Policy or Rem Report vote in 2014 5 Vote Breakdown Not Disclosed

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