What happened to pensions in May 2024?

Each year publicly listed companies hold an event for their shareholders, known as an Annual General Meeting (AGM). May is often a busy time for AGMs, with many big companies (like HSBC and Shell) choosing this month to provide an update on their performance. In most cases, the CEO of the company will share information such as the financial results or any business strategy announcements for the years ahead.

This year’s AGM season has seen some interesting trends:

• physical meetings are still popular, but many companies are opting for hybrid formats allowing remote participation;
• environmental, social, and governance (ESG)issues are a major focus for investors; and
• investors are interested in how companies are adapting to new technologies, such as Artificial Intelligence (AI).

The outcome of AGMs can influence stock prices, so investors may keep a close eye on these developments.

The purpose of AGMs

An AGM shouldn’t just be a one-way street for information for businesses to share updates, it’s also the annual opportunity for the company’s leadership team to answer direct questions from their shareholders, the people invested in their company. These meetings enable shareholders to challenge management, hold directors to account and ensure that the views and interests of shareholders are part of the decision making process. An important way to do this is via shareholder voting on topics such as the re-election of directors, remuneration policies, dividend payments, share payments and the approval of company accounts. Increasingly we’re seeing votes against directors used as a way for shareholders to signal dissatisfaction with the direction leadership are taking the company.

Company spotlight: Shell

Earlier this year, oil and gas giant Shell relaxed its goal for cutting carbon emissions by 2030. The company argued there’d be high demand for natural gas and a bumpy shift towards cleaner energy sources. On 21 May, Shell held its 2024 AGM in London.

The activist group, Follow This, asked Shell to align its emissions targets with the Paris Agreement on climate change, including the carbon released when customers burn the company’s fuels. The group had backing from major investors, managing trillions of dollars, on their proposal. Around 19% of shareholders voted in favour of this proposal, down from just over 20% last year. Shell’s management team had recommended that shareholders reject it. However, the management team also recommended endorsement of their aim to achieve net-zero emissions by 2050.

PensionBee philosophy

At PensionBee, our customers’ views guide our approach to voting. In 2024, we sought customer input on how shareholders can express dissatisfaction with the management of the companies their pensions invest in. Through interviews, focus groups, and surveys, we gathered feedback from our customers.

The majority of our customers expressed that shareholder resolutions, when the shareholders of a company submit a proposal in the form of a written resolution, and AGMs are the most effective ways to hold companies accountable for their behaviour. To ensure our voting policy aligns with our customers’ expectations for the 2024 proxy voting season, we presented customers with real examples of prominent shareholder resolutions from recent AGMs such as McDonald’s Corporation and Shell Energy. Proxy voting season refers to the time period during which shareholders of a company have the opportunity to vote on important matters through the use of proxy forms.

We asked our customers to indicate their voting preferences in each scenario. The PensionBee Voting Choice Report 2024 contains the complete survey results, revealing how our customers would’ve voted in the given scenarios. These insights will help us shape our approach to proxy voting and corporate governance.