FTSE 100 stars HSBC, Aviva, BAE Systems and Unilever face the music

The UK's biggest companies are in the spotlight like never before, and there could be a radical shake-up at one of these blue-chips and a row over pay at another.

HSBC Holdings (LSE:HSBA) shareholders are set to vote on whether the banking giant should respond to calls for a radical break-up of the business.

A special resolution tabled by a group of shareholders urges HSBC to begin working on structural reforms, including a potential spin-off of its Asia operations.

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The vote takes place at the AGM on 5 May and should provide the clearest insight yet into the depth of feeling towards a split. HSBC has urged shareholders to reject the motion, arguing that it would significantly dilute the economics of its international business model.

Among other blue-chip AGMs taking place in the next fortnight, Unilever (LSE:ULVR) is likely to come under pressure over the pay deal agreed for new boss Hein Schumacher.

Unilever

When: 11.30am, Wednesday 3 May.

Where: Unilever House, Springfield Drive, Leatherhead, KT22 7GR.

How to participate: Proxy voting instructions should be returned by 11.30am, Monday 1 May. A live webcast of the meeting will be available. More AGM details can be found here.

Who’s in the chair? Nils Andersen, the former chief executive of Carlsberg and AP Moller-Maersk, joined the board in 2015 and has been chair since 2019.

How did the company do in 2022? Turnover increased 14.5% to 60.1 billion euro (£53.2 billion) following underlying price growth of 11.3% and a 2.1% decline in volumes. Operating profit improved slightly to 9.7 billion (£8.6 billion) despite a margin decline of 2.3 percentage points driven by input cost inflation. The company announced a 1.5 billion euros (£1.3 billion) share buyback and 4.3 billion euros (£3.8 billion) of dividends during 2022, including last month’s unchanged fourth quarter payment of 38.12p a share.

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How have shares performed? Up 6% to 4,182p (4,362p on Thursday).

How much is the boss paid? Alan Jope, who will step down as chief executive in July after 38 years with the business, receives an unchanged annual salary for this year of 1.56 million euros (£1.4 million). He will be paid up to his year-end retirement date and is also eligible for a 2023 bonus. His total remuneration for 2022 amounted to 5.4 million euros (£4.8 million) after the annual bonus scheme generated 3.1 million euros (£2.7 million) based on 89% of the maximum opportunity. Half of this award is deferred into shares to be held for three years. Jope’s final 2022 remuneration figure also includes 618,000 euros (£546,700) from the vesting of shares awarded in the long-term incentive scheme.

How much is the new boss due to be paid? Hein Schumacher has been recruited on fixed pay of 1.85 million euros (£1.6 million). He has been a Unilever board member since October and is currently chief executive of Royal FrieslandCampina, the global dairy and nutrition business. He will receive a relocation allowance to support his move to the UK for a period of 24 months and will also be granted share awards to compensate him for cash incentives from his previous employer that he will forfeit due to joining Unilever. Finance director Graeme Pitkethly, whose base salary has been increased for this year by 6% to 1.25 million euros (£1.1 million), got 3.8 million euros (£3.4 million) in 2022.

How did last year’s AGM go? The annual remuneration report was backed with 92.52% of votes in favour.

What’s the view of voting agencies? Glass Lewis is concerned at the big increase in pay for the incoming CEO compared with the level awarded to his predecessor, particularly as Schumacher lacks experience in publicly listed entities of a similar scope and complexity to Unilever. It recommends shareholders vote against the annual remuneration report, adding: “We do not believe the committee has provided a cogent rationale for the necessity of such a remuneration package.” 

How’s the company doing on diversity? Five female directors accounted for 38% of boardroom roles at the end of 2022 and Unilever exceeded the Parker Review recommendation with 31% ethnic minority board membership.

Aviva

When: 10.30am, Thursday 4 May.

Where: Norwich City Football Club, Carrow Road, Norwich, NR1 1JE.

How to participate: The venue has been moved out of London as the company seeks to recognise its strong connections around the country and give shareholders from different regions a better chance to attend in person. Norwich is home to Aviva (LSE:AV.)’s general insurance business and the 2024 AGM will be in York, the location for some of its life businesses. The meeting will be available online, with the ability to vote and ask questions. Proxy voting instructions should be submitted by Tuesday 2 May. More AGM details can be found here.

Who’s in the chair? George Culmer, the former chief financial officer of Lloyds Banking Group, has been in the role since May 2020.

How did the company do in 2022? Operating profit increased by 35% to £2.21 billion, with the UK & Ireland Life division up 34% after a strong performance in annuities and equity release products. The general insurance operating profit rose 1% to £771 million after robust trading in Canada was partly offset by lower profits in UK & Ireland. The company returned £4.75 billion of capital to shareholders during 2022 and declared a final dividend of 20.7p a share for payment on 18 May, lifting the total in line with guidance by 41% to 31p.

How have shares performed? Down 20% to 442.8p (425.8p on Thursday).

How much is the boss paid? Amanda Blanc’s base salary increased by 4.8% in April to £1.08 million. Her total remuneration for 2022 came to £5.5 million, the highest figure received by the company’s chief executive over the past decade. This included £2 million of cash and shares as the annual bonus scheme paid 97.2% of the maximum opportunity. The chair of the remuneration committee said: “Amanda Blanc’s performance as group CEO continues to be exceptional. Aviva’s share price has performed strongly against both our sector and the broader FTSE 100, reflecting strong execution of the clear strategy which Amanda has set out.” The final figure also included £2.3 million from the first set of long-term incentives granted to Blanc since she became chief executive in July 2020, vesting at 72% of the total.

How did last year’s AGM go? The annual remuneration report was approved with 95.17% of votes in favour. However, the meeting was marred after Blanc was the target of sexist remarks from individual shareholders.

What’s the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report.

Is there a climate-related vote? The company has been an advocate for listed companies to publish consistent information on climate risks and the impact on their businesses. A resolution tabled at its AGM is an advisory vote on the company’s Climate-Related Financial Disclosure around the themes of governance, strategy, risk management and metrics and targets. Details of Aviva’s disclosures for 2022 appear in the annual report.

How’s the company doing on diversity? The gender split on the board was unchanged at the end of 2022 at 41.7% female, with an improved figure of 37.3% for senior leadership. Aviva meets the Parker Review target to have at least one director from an ethnic minority background, with the percentage in UK senior leadership roles at 9.4%.

HSBC

When: 11am, Friday 5 May.

Where: The Eastside Rooms, 2 Woodcock Street, Birmingham, B7 4BL.

How to participate: The meeting will be webcast live, enabling shareholders to attend, vote and ask questions in real time. Proxy voting instructions must be returned by 11am, Wednesday 3 May. More AGM details can be found here.

Who’s in the chair? Former Prudential chief executive Mark Tucker has been in the role since October 2017.

How did the company do in 2022? Revenues increased 4% to $51.7 billion (£41.8 billion) following growth in net interest income across all its global businesses. Adjusted profit before tax rose by $3.4 billion to $24 billion (£19.4 billion), but fell $1.4 billion to $17.5 billion (£14.2 billion) when including an impairment on the sale of retail banking operations in France. A second interim dividend of 23 US cents a share (18.59p) is due to be paid on 27 April, making a total of 32 US cents a share equivalent to 44% of reported earnings per share.

How have shares performed? Up 13% to 515.7p (575.1p on Thursday).

How much is the boss paid? There is no change to Noel Quinn’s base salary of £1.3 million or his fixed pay allowance of £1.7 million, which is released in shares over five years in order to  maintain compliance with regulations on the ratio of variable to fixed pay. Quinn’s total remuneration amounted to £5.56 million, including £2.16 million from the annual bonus scheme. This was based on 75.35% of the maximum opportunity after a reduction of 5% or £114,000 was applied to reflect the group’s performance against risk metrics and specific matters relating to capital management. No long-term incentives vested for Quinn, whose total remuneration was the highest for an HSBC CEO since Stuart Gulliver got £6.1 million in 2017.

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What about the finance boss? Total remuneration for Ewen Stevenson, who is leaving next week, amounted to £4.7 million and included an annual bonus of £1.1 million after the committee applied downward discretion of 15% or £193,000. Successor Georges Elhedery will get a base salary of £780,000 a year and a fixed pay allowance of £1.1 million. 

What’s in the special resolutions? A group of shareholders has tabled a resolution calling for HSBC to devise, implement and report quarterly on structural reforms of the bank, including an Asia spin-off. The motion, which requires the support of 75% of votes cast, reportedly has the backing of major shareholder Ping An. The China-based insurer has lobbied for such a split, believing it will generate longer-term shareholder value. The same group of HSBC shareholders has also tabled a resolution calling for the company to distribute dividends at the pre-Covid-19 pandemic level, which means not less than 51 US cents a share a year.

What is HSBC’s response? It said performance in 2022 demonstrated that the current strategy is working and improving returns. The board evaluated structural reforms, including for the Asia business, as recently as last year and concluded they would significantly dilute the economics of its international business model. “This would result not only in a material loss of value for shareholders but also lower dividends.” It believes the second resolution is unnecessary as the company already has a long-term sustainable dividend strategy. A 50% payout ratio has been established for 2023 and 2024, as well as a return to quarterly dividends from the first quarter of 2023. HSBC added: “Our objective is to restore the dividend to pre Covid-19 levels as soon as possible whilst making sure the dividend policy is sustainable over time as opposed to being prescriptive on dividend amounts each year.” 

What’s the view of voting agencies? Glass Lewis supports the company on the two special resolutions. It said: “The board's strategy and plans appear valid and are likely to result in greater returns and value, on a risk and cost-adjusted basis, than the overly prescriptive and, in our opinion, unnecessary proposals.” The agency also recommends shareholders vote in favour of the annual remuneration report.

How did last year’s AGM go? The company’s binding vote on its new remuneration policy got 95.73% and the annual remuneration report received 95.83%. 

How is the company doing on diversity? Board-level gender diversity was 33% at the end of 2022, falling to 19% for the executive management team. HSBC meets the Parker review recommendation for at least one director from an ethnic minority background.

BAE Systems

When: 11,30am, Thursday 4 May.

Where: Hall 5, Farnborough International Exhibition and Conference Centre, GU14 6TQ.

How to participate: A live webcast will enable BAE Systems (LSE:BA.) shareholders to submit questions up to an hour before the meeting starts as well as during the meeting and to vote on the resolutions once the poll is open. Proxy voting instructions should be returned by 11.30am, Tuesday 2 May. More AGM details can be found here.

Who’s in the chair? Sir Roger Carr is standing down after the AGM, having led the BAE board for nine years. He is due to be succeeded by Cressida Hogg, a former executive director of 3i Group whose four-year tenure as chair of Land Securities ends next month.

How did the company do in 2022? Sales increased by 4.4% to £23.3 billion, with underlying earnings per share up by 9.5% to 55.5p as the company delivered “another exceptional” year of free cash flow at £1.95 billion. A final dividend of 16.6p is due to be paid on 1 June, meaning the total has increased for 19 consecutive years following a 7.6% rise to 27p.

How have shares performed? Up 55% at 856p (1,020.5p on Thursday).

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How much is the boss paid? Charles Woodburn’s salary for 2023 has increased 4% to £1.18 million. His total remuneration for 2022 was close to his maximum entitlement at £10.7 million, which compares with £7.1 million the previous year and is comfortably the largest sum paid to BAE’s CEO in the past decade. The figure includes £2.49 million from the annual bonus scheme based on 97% of the maximum opportunity, with one-third deferred into BAE shares for a three-year period. The 100% vesting of long-term incentives awarded in 2020 accounted for £6.85 million of the final figure. This followed a total shareholder return of 63.5% that was greater than the upper quintile of both BAE’s comparator group and its FTSE 100 group. No adjustments to performance targets were made due to Covid-19.

What’s in the new remuneration policy? The policy is broadly the same, but long-term incentive performance awards for the head of the US business are to increase from 298% to 440% of salary as BAE moves into line with the “fiercely competitive US market in which we compete for talent”. The US accounted for 44% of group sales in 2022. The maximum annual bonus opportunity for the finance director is to increase from 160% to 200% of salary.

What’s the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report and support the binding vote on the new three-year remuneration policy. It believes the pay committee has provided a “well rationalised approach” to balancing remuneration demands across multiple jurisdictions.

How did last year’s AGM go? The annual remuneration report was backed with 96.01% of votes cast in favour.

How’s the company doing on diversity? Five women accounted for 38% of the board at the end of 2022. The company meets the requirements of the Parker review, with one director from an ethnic minority background.

ITV

When: 11am, Thursday 4 May.

Where: Maynard Theatre at The King’s Fund, No. 11 Cavendish Square, London W1G 0AN.

How to participate: Questions sent to groupsecretariat@itv.com no later than 5pm on Thursday, 27 April will be answered on the website by the following Monday evening ahead of the proxy voting deadline of 11am, Tuesday 2 May. More AGM details can be found here.

Who’s in the chair? Former InterContinental Hotels chief executive Andrew Cosslett is hosting his first ITV (LSE:ITV) AGM.

How did the company do in 2022? Revenues rose 7% to £4.3 billion, with ITV Studios up 19% at £2.1 billion and the Media & Entertainment arm down 1% at £2.2 billion due to a small decline in total advertising revenue. Adjusted earnings of £717 million were 12% lower following investment in the ITVX platform and other projects, while adjusted earnings per share fell by 14% to 13.2p. An unchanged final dividend of 3.3 pence a share is due to be paid on 25 May, giving a total for the year of 5p.

How have shares performed? Down 33% to 75.2p (80.98p on Thursday).

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How much is the boss paid? Carolyn McCall’s base salary for this year has increased by 4% to £1.01 million. Her total remuneration for 2022 came to £3.5 million, including cash and shares worth £1.4 million after the annual bonus scheme paid 81.72% of the maximum opportunity. Long-term incentives awarded in 2020 contributed £984,000 to the final figure based on a vesting outcome of 38.96%. These shares must be held for another two years.

How did last year’s AGM go? The annual remuneration report was approved but with 18.68% of votes cast against. ITV said there was no consistent reason for the pushback, although it said some shareholders retained reservations regarding the remuneration policy approved by 92% of votes at the 2021 AGM.

What’s the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report.

How’s the company doing on diversity? The gender and ethnic diversity representation on the board is 41.67% and 16.7% respectively.