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Getting Ready for the Next Proxy Season2018 FTSE 100 Proxy Review
The 2018 proxy season saw an increasing focus
from investors on key governance matters such as
disclosure quality, director election, board
effectiveness, CEO pay and Environmental Social
Governance (ESG) practices. Although companies
have been improving their disclosure, the need for
transparency continued to be an important theme.
The season also saw a higher dissent from
shareholders on director re-elections than previous
years. Shareholders were sending a strong
message to directors that they will be held directly
accountable for their individual actions. The public
register, which is compiled by the Investment
Association in light of growing revolt in corporate
governance and general culture, showed that the
number of resolutions opposing individual director
re-elections increased from 38 in 2017 to 80 in 2018
in the United Kingdom. The FTSE 100, however,
showed a growth of 20% relative to the number of
resolutions in 2017. Specifically, in the FTSE 100, 6
companies in the index recorded more than 20% in
dissenting votes to re-elect their director(s) to the
board compared to 5 in 2017. These companies
are The Berkeley Group Holdings plc, AstraZeneca
plc, Barratt Developments plc, Sky plc, Royal Mail
plc, and British American Tobacco plc. The main
reason for the shareholder revolts is the number
of directorships held by individual members of the
board. Shareholders questioned whether a director
with several board appointments can really fulfil his
or her duties.
2017
382018
80
In preparation for the forthcoming 2019 proxy season, CGLytics is releasing its third consecutive annual FTSE 100 proxy review, providing boards with key takeaways and drawing from the 2018 season to ensure companies are adequately prepared to engage.
Total Number of Resolutions Opposing Director Re-election (all UK companies):
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Overboarding and having the right board
composition, which includes diversity, continued to
hold shareholders’ interest. Investors were looking
closely at the number of appointments held by
directors, in addition to the mix of skill sets, tenure
and gender diversity at the board level.
Insight:
Shareholders are looking closely at the number of appointments held by directors and whether directors could be “overboarded”.
Source: Investment Association Public Register
Last season brought some interesting highlights as
the executive remuneration policies were due for
renewal and up for voting. CEO pay continued to be
an area of concern for shareholders as pay equity,
transparency, executive pay levels, and pay for
performance continued to ratchet higher.
• The average votes in favour of the
remuneration report fell slightly lower than the
previous year with corporations experiencing
significant push back on remuneration policies
that investors felt lacked clarity and enough
disclosures.
• Investors paid more attention in setting a
ceiling for total realised pay that directors could
earn and engaged actively on the performance
metrics of company remuneration plans.
• A study performed by CGLytics showed that almost
a third of the FTSE 100 companies have significant
misalignment between pay and performance
on a one and three year basis. Please refer to
the Appendix for CGLytics’ annual FTSE 100 Pay
for Performance Overview. It outlines the total
CEO realised compensation and company Total
Shareholder Return (TSR) performance for all FTSE
100 constituents against their peers in the index.
The Say on Pay LandscapeThe United Kingdom has been at the forefront
of shareholders’ concern over excessive pay
as investors over the years have voted against
issuers’ advisory remuneration reports. To
address these concerns, the Financial Reporting
Council (FRC) earlier in July 2018 issued a revised
Corporate Governance Code, which stressed
that remuneration committees should consider
workforce remuneration and related policies when
designing director remuneration. The revised
2018 Proxy Season HighlightsCompanies with Greatest Misalignment in 2017:
1. WPP plc
2. CRH plc
3. Sky plc
Companies with Greatest Misalignment on a Three-Year Basis (2015-2017):
1. Shire plc
2. Lloyds Banking Group plc
3. WPP plc
code also added that, as a measure, formulaic
calculations of performance-related pay should
be rejected. To reinforce the role of directors in
protecting shareholder interests, directors were also
encouraged to exercise independent judgement
and discretion when authorising remuneration
outcomes, taking account of company and individual
performance, along with wider circumstances.
Thirty-three companies of the FTSE 100
index sought a binding shareholder approval for
their remuneration policies, valid for at most three
years. Investors generally questioned the earning
potentials in short-term incentive plans presented
in some of the remuneration policies for
approvals. For example, at Rentokil Initial plc,
the board’s decision to increase the annual
bonus stretch or maximum from 100% to 150%
cost the board a dissent of around 25% on their
remuneration policy. Other companies that faced
more than a 20% vote against their remuneration
policy were Informa plc and Unilever plc.
Royal Mail plc received the highest shareholder
Getting Read for the next Proxy Season
2
Getting Ready for the Next Proxy Season
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revolt on their remuneration report for the 2017
performance year compared to other FTSE 100
companies. With over 70% of the votes against the
advisory resolution for the Directors’ Remuneration
Report, the shareholders voiced their concern
saying the company has not been clear enough
about contractual entitlements of Moya Greene,
the retiring CEO, and the remuneration of Rico
Back, the new Group CEO.
Persimmon plc is the company that received the
second highest shareholder revolt with almost 49%
of votes against the Directors’ Remuneration Report.
The shareholders were concerned about the level of
remuneration that resulted from the vesting of 2012
awards, saying that there was no cap.
The other companies which received shareholder revolts
of more than 30% on their remuneration reports were
Astra Zeneca plc, BT Group plc, Unilever plc and CRH plc.
Shareholders of CRH plc communicated their concerns
regarding the directors’ remuneration and advocated for:
lower increase for directors’ remuneration, preference for
part of the increase to be delivered through long-term pay
and tougher executive shareholding guidelines. Several
shareholders asked about the mix of performance metrics
for the Performance Share Plan, as CRH uses KPIs other
than TSR. The company argued that they always strive
to balance the external shareholder metric (TSR) and an
internal metric that is more within management’s control.
Support Level: Advisory Votes for Remuneration Report
0
10
20
30
40
Support Level > 90%
50
60
70
80
90
100
Support Level > 89 - 70%
Support Level > 69 - 60%
Support Level < 60%
7975
16 20
2 3 3 2
2016 2017Performance Year:
3
Insight:
Shareholders cited alignment between compensation and performance as their main concern for voting against remuneration related resolutions.
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44
Overview of Pay vs. Total
Shareholder ReturnThe graphs below illustrate the alignment between
the average realised pay and TSR of the FTSE 100
companies from 2009 until 2017. The absolute value
graph shows the average value of realised pay and
TSR each year, while the relative growth graph
illustrates the year over year change. The average
TSR demonstrates a high volatility and a decrease
while the average realised pay fluctuates along the
years but with less volatility and an increase from
2009 to 2017. The average TSR for the FTSE 100
decreased to 8% in 2017 while the average total
realised pay increased by 5.5% to GBP 4.9 million.
cglytics.com
Getting Read for the next Proxy SeasonGetting Ready for the Next Proxy Season
Pay vs. TSR: Absolute Growth
-10
-5
0
5
10
15
20
25
2010 2011 2012 2013 2014 2015 2016 201720090
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
% GBP
TSR000Pay
Pay vs. TSR: Relative Growth
-20
-15
-10
-5
0
5
10
15
2010 /2011
2011 /2012
2012 /2013
2013 /2014
2014 /2015
2015 /2016
2016 /2017
2009 /2010
%
20
25
TRC Growth
TSR Delta
5
Compensation Mix Design:
Fixed vs. VariableThe FTSE 100 CEO compensation structure
continues to evolve. We saw a strong emphasis on
rebalancing CEO pay structure to be more long-
term oriented in the 2017 performance year. Base
salary fell from 20.1% in 2016 to 18.6% in 2017,
and short-term incentives fell from 23% to 22.9%
against the previous year. However, there is still
further work to be done. The charts below show
that when reviewing changes in compensation
structure over a longer period (from 2009 to 2017),
there actually has been a shift from long-term
incentives to fixed and short-term incentives.
0
20%
40%
60%
80%
Average CEO Realised Pay Breakdown100%
2010 2011 2012 2013 2014 2015 2016 20172009
Base Salary Realised STI Realised LTI
18%
21%61%
Salary Realised STI Realised LTI Salary Realised STI Realised LTI
19%
23%58%
2009 2017
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46
%
%
Compensation Mix Design:
Fixed vs. VariableThe annual pay for performance study performed by
CGLytics demonstrates that there is still a material
misalignment between pay and performance in the
FTSE 100 companies.
Pay for Performance Review: 2017
• 33% of the companies still display a pay for
performance misalignment.
• 34% of the companies display a good alignment.
• 32% of the companies show a conservative pay
level for the performance generated when
compared to the other FTSE 100 companies.
Pay for Performance Review: Three-Year Basis
• On a three-year basis, 29% of the companies
display misalignment.
• 42% of the companies display a good alignment.
• 28% of the companies show a conservative pay
level for the performance generated relative to
FTSE 100 companies.
British banks including HSBC and Lloyds show pay
for performance misalignment when measured over
a one-year period and continue to be misaligned
over a three-year period.
British American Tobacco, Randgold and Experian
plc were companies displaying misalignment
measured over a one-year period, though they
demonstrate good alignment on a three-year basis.
Companies like Melrose, Carnival, RSA Insurance
and WM Morrison are displaying a misalignment
when measured over a one-year period. However,
over a period of three years, their CEO pay falls into
the lower quartile despite strong TSR performance
when bench-marked against other FTSE 100 companies.
CGlytics‘ pay for performance study finds 29% of the
companies still show a misalignment over a three-year
period.
The charts on the next page display CGLytics’ pay for
performance analysis for the FTSE 100 CEO pay and
TSR performance over a one- and three-year period.
The companies that are situated within the grey
area are considered companies that have a strong
alignment between pay and performance. The
companies above and below the grey area show a
pay for performance misalignment. The entire index
constituents were used for this analysis.
33% 34%
32%
29%
42%
28%
Pay for Performance
HSBC Lloyds British Imperial Tobacco
Randgold Experian
Three
Year Basis (2015 - 2017)
2017
Realised LTI
cglytics.com
Conservative Aligned Misaligned
Getting Read for the next Proxy SeasonGetting Ready for the Next Proxy Season
7
2017 Pay for Performance Alignment CEO Total Realised Compensation vs Total Shareholder Return
x
Tota
l Rea
lised
Com
pens
atio
n - P
erce
ntile
Ran
k
0th
50th
10
0th
Below Median TSR Below Median Compensation
Above Median TSR Below Median Compensation
WPP
SKY
CRHVodafone
AstraZenecaPrudential
RELXCarnival plc
ShellHSBC
Schroders
Randgold
ShireImperial
RSA
Lloyds BankAviva
ABF
Wm MorrisonGlaxoSmithKline
CompassDirect
Experian
Reckitt BenckiserBP
BAT
Melrose
Matthey
Bunzl
J Sainsbury
SSE
Grid
BT
ITV
BarclaysSEGRO
DiagioEAT
NMC
EVRAZ
Consolidated
Taylor
Rentokill
TUI
DCC
DS Smith
BarrattLSE
Ashtead
Smith & Nephew
Tesco plc
Berkeley
Intertek
Coca Cola HBC
Anglo3i
Unilever
Centrica
Severn TrentUnited Utilities
BAE
PersimmonSmurfit
Hotels
HalmaCroda
MondalMicro Focus
St James’
BHPBurberry
Rio Tinto plc
Sage
G4S
British Land
LegalOld Mutual
Pearson
GlencoreAntofagasta
RBS
Rolls Royce
Standard Life AberdeenChartered
Admiral Fresnillo
FergusonMail
SmithsWhitbread
Paddy
Mediclinic
NextMarks & Spencer
KingfisherLandsec
Informa
HarreaveseasyJet
SmithsFerguson
RioTintoDiagio
ExperianConsolidatedSmurfit
Direct
Schroders
Legal
AngloImperialSmith & Nephew
Bunzl
BT
VodafoneBritish Land
ITV
ABFBarclays
Taylor
3i
Berkeley
CompassTUI
BATRandgold
Barratt
DS SmithLSE
Unile-
RELX
Shell
HSBC
BPPrudential
GlaxoSmithKline
AstraZeneca
Reckitt Benckiser
Burberry
Sky
easyJet
Shire
WPP
Lloyds Banking
BAEOld Mutual
Tesco plc
Aviva
Grid
G4S
United UtilitiesChartered
Marks & SpencerCRHRBS
WhitbreadCentrica
Next
CRH
Carnival plcHotels
EAT
Mondi
Ashtead
Paddy
NMC
Coca Cola HBCPersimmon
Sage
HalmaInforma
CrodaSt James’s
AntofagastaGlencore
Wm MorrisonMail
Severn TrentKingfisher
J Sainsbury
Mediclinic
Matthey
Rolls Royce
Pearson
SSE
SEGRO
DCC RentokillIntertek
EVRAZ
Hargreaves
RSA
Standard Life Aberdeen
BHP
AdmiralFresno
MelroseMicro Focus
2017 3 Year Pay for Performance Alignment CEO Total Realised Compensation vs Total Shareholder Return
Tota
l Rea
lised
Com
pens
atio
n - P
erce
ntile
Ran
k
0th
50th
10
0th
0th 50th 100thBelow Median TSR Below Median Compensation
Above Median TSR Below Median Compensation
Getting Ready for the Next Proxy Season
cglytics.com
0th 100th 50th
Below Median TSR Above Median Compensation
Above Median TSR Above Median Compensation
Below Median TSR Above Median Compensation
Above Median TSR Above Median Compensation
Percentile Rank
Percentile Rank
48
%
%
The company with the highest CEO compensation
is Melrose Industries plc. The CEO Simon Peckham’s
total realised compensation was GBP 42.8
million with Melrose’s TSR being 9%, earning the
company a performance percentile rank of 37 in the index
for the financial year under consideration. Over a three-
year period, the CEO’s total realised compensation grew
by more than 45 times, putting the company at the 100th
percentile despite the fact that TSR ranked at the 33rd
percentile with a negative change of 3%. Though when
looking at the cumulative value of the TSR, it grew with
344% over a three-year period, meaning an investment
made in the company at GBP 100 in 2015 would be worth
GBP 444 in 2017. This is the second highest investment
return in the index; yet, almost 23% of shareholders still
voted against the company’s remuneration during the
2018 proxy season.
NMC Health plc, a healthcare chain based in
the United Arab Emirates, had a percentile
ranking of 57 in the FTSE 100 index for its CEO
compensation. In 2017, the Chief Executive’s total
realised compensation was GBP 3.9 million with
Total Shareholder Return at 88%, which placed the
healthcare company at the forefront of the index
rankings. Total realised compensation grew by
493% from 2015 till end of 2017, whiles TSR
increased by 4%. The cumulative TSR from 2015 to
2017 is 538%, which means that GBP 100
invested in NMC in 2015 would be worth GBP 638
in 2017. This is the highest investment return in
the index. For their 2017 remuneration report,
shareholders voted in favour by 93%.
Centrica plc emerged as the company with the
lowest investment return in the index. The
Centrica CEO’s total realised compensation was GBP 1.7
million, which places the company in the 15th percentile
of the index. TSR for the 2017 financial year was -38%,
which ranked the lowest in the index. According to
our analysis, an investment worth GBP 100 in 2015
would be worth GBP 58.23 in 2017. This means that the
investment has been depleted by 42%. Yet, for their 2017
remuneration report, shareholder votes in favour were
95%.
Housebuilder Persimmon was heavily and negatively
featured in the news during the proxy season for a large
payout that became available to its CEO, demonstrating
the risks of pay for performance misalignment. Following
public and political backlash, Persimmon announced
that “by mutual agreement and at the request of the
Company, Jeff Fairburn, Group Chief Executive, is to
step down.” In 2012, shareholders approved a long-
term incentive plan, which did not have a cap, leading
to potential earnings of over GBP 100 million ofto the
CEO. There was unrest between the board and investors,
leading to the resignation of the Chairman of the Board,
Nicholas Wrigley, and Senior Independent Director,
Jonathan Davie, who was also the Remuneration
Committee Chair. A significant component of the GBP
100-million package was options, which were vested but
not exercised by the CEO during the financial year. This
led to a total realised pay for the CEO of approximately
GBP 2.2 million, which ranked at the 30th percentile for
the index. TSR was 63%, which was also ranked 98th in
the index. From 2015 to 2017, total realised compensation
grew by 16% and TSR by 28%. Three-year TSR for the
company is 105%, which means a GBP 100 investment in
the company in 2015 to be worth GBP 205 in 2017. The
company’s annual report on remuneration for 2017 was
narrowly passed by votes with around 52%. Another 31%
of shareholders abstained from voting on the resolution.
cglytics.com
Getting Read for the next Proxy SeasonGetting Ready for the Next Proxy Season
9
2019 Proxy Season: Key Governance Themes for BoardsThe forthcoming season will continue to push
boards of companies to be well informed on their
governance practices. Boards should be ready to
engage early with their investors, who continue
to push companies to reform their practices and
mitigate exposure to governance risks.
Over the last few years, we have seen investors
expanding their Environmental, Social and
Governance (ESG) research capabilities to aid
their engagement and voting decisions. Boards of
companies can expect their investors to become
increasingly more sophisticated in assessing their
governance practices. A constructive dialogue
underpinned by powerful intelligence will support
boards in these engagements and in obtaining
shareholder buy-in during the early stages of the
proxy season.
What themes can boards expect in the 2019 season?
• Transparency. There continues to be a
push for transparency in engagement and
disclosures. Boards will need to be prepared
to better disclose and engage on their board
composition, say on pay proposals, and
governance decisions (particularly those related
to ESG).
• Board refreshment, gender diversity and board
composition. In the last proxy season, investors
actively engaged with boards on these key
governance matters. We expect this to continue in
the upcoming season as investors are looking to
further influence board strategy and composition for
their tie to company performance. Nomination and
Governance committees will need to demonstrate
that their directors have the right skills and that their
boards are diverse—also that there are no conflicts of
interest or overboarding exposure. These governance
matters will be closely monitored by investors
when companies are putting forward directors for
nomination and election.
• CEO succession and board evaluation. Chairs of
the Board and their Nomination and Governance
committees should be ready to provide a plan for
CEO succession to mitigate business continuity risk;
they must also demonstrate a robust process and
system for evaluating the performance of the board.
• CEO pay. CEO pay will continue to be
scrutinized. Compensation committees will
need to demonstrate a clear independence—
and will need to possess the right expertise
when engaging with their company
shareholders and other stakeholders.
Compensation policies and practices should
be designed to support strategy and promote
long-term sustainable success. It should be
aligned to company purpose and values and be
clearly linked to the successful delivery of the
company’s long-term strategy. Compensation
committees should be ready to engage with
their shareholders on the sustainability of their
company’s compensation practices (e.g., pay
equality and alignment between compensation
and performance).
• ESG. Investors will continue to evaluate companies’
progress on their environmental, social, and
governance (ESG) practices. Boards should be
prepared to disclose how ESG practices are
embedded in the company’s long-term plan for value
creation.
• Proactive shareholder engagement. The
importance of boards having a timely and open
dialogue with their shareholders will be critical.
Investors are looking for boards to engage
proactively, and not when a negative vote has
Getting Ready for the Next Proxy Season
cglytics.com
%
%
10cglytics.com
been issued or recommended.
With the governance landscape growing
increasingly complex, boards need to ensure they
have access to the same level of information as
their shareholders. Having the right data at your
fingertips has become key to making informed
decisions and conducting better engagements in
this active shareholder environment.
Getting Read for the next Proxy SeasonGetting Ready for the Next Proxy Season
cglytics.com
FTSE 100
2017 Δ 2015-2017 2015-2017
Compensa-tion ReportAGM Vote Outcomes
Total Realised
Compen-sation
(million GBP)
2017 TSR
Com-pen-
sation Ranking
Perfor-mance
Ranking
Growth 2015-2017 TRC
Δ 2015-2017 TSR
Compen-sation
Ranking
Perfor-mance
Ranking
3YR Total Realised
Compen-sation
(million GBP)
3Y TSRCompen-
sation Ranking
Perfor-mance
Ranking
2017 year-end value
of 100 GBP investment
made January 1st, 2015
For%
1 (73) Old Mutual plc 3.4 16% 46 46 -13% 18% 37 65 9.6 37% 46 44 137 71.39
2 (46) Severn Trent plc 2.0 1% 23 23 -3% -12% 46 20 6.2 21% 15 33 121 99.34
3 (15) Pearson plc 1.5 -5% 12 11 -19% 0% 33 42 4.2 -27% 9 2 73 99.36
4 (91) Anglo American plc 6.1 37% 80 81 87% 111% 84 99 15.6 41% 71 48 141 90.35
5 (8) The Berkeley Group Holdings plc 27.5 56% 99 97 52% -1% 75 39 53.4 94% 99 86 194 83.91
6 (67) G4S plc 3.4 17% 48 50 38% 33% 70 88 9.0 7% 40 21 107 97.36
7 (85) Marks & Spencer Group plc 1.3 -5% 8 10 -71% -3% 3 35 7.2 -23% 22 4 77 98.70
8 (7) BAE Systems plc 2.1 0% 24 21 -35% -10% 24 24 8.6 37% 35 43 137 98.40
9 (54) Intertek Group plc 11.6 51% 95 92 500% 30% 98 85 18.4 134% 79 94 234 85.38
10 (26) 3i Group plc 6.8 34% 82 79 56% 22% 76 74 18.5 127% 80 93 227 94.29
11 (2) Legal & General Group plc 3.3 17% 45 48 -18% 4% 34 47 10.6 29% 52 39 129 98.17
12 (41) Land Securities Group plc 1.6 -2% 14 17 -43% -20% 12 14 5.9 -4% 14 12 96 98.14
13 (-) Mediclinic International plc 0.9 -15% 2 5 12% N/A 59 N/A 2.5 N/A 1 N/A N/A 93.54
14 (77) Ashtead Group plc 5.4 28% 74 70 28% 30% 66 84 12.9 82% 61 78 182 90.85
15 (43) Coca-Cola HBC AG 9.3 39% 90 85 276% 19% 96 68 13.7 109% 65 91 209 98.95
16 (18) Kingfisher plc 1.6 0% 13 19 0% 6% 48 31 5.3 8% 11 22 108 98.05
17 (16) Johnson Matthey plc 2.1 -1% 26 18 83% 20% 81 70 4.8 -2% 10 14 98 94.60
18 (9) United Utilities Group plc 2.0 -4% 22 13 -36% -10% 21 25 7.5 3% 24 19 103 99.00
19 (38) London Stock Exchange Group plc 4.7 32% 67 77 -42% 7% 16 48 18.8 77% 81 72 177 94.09
20 (39) DS Smith Plc 4.2 31% 64 73 -58% 4% 4 44 19.4 77% 83 71 177 96.79
21 (21) Next plc 1.2 -3% 6 15 -74% -15% 2 18 7.6 -22% 30 5 78 99.25
22 (66) Unilever plc 7.4 29% 83 72 -7% 15% 43 60 23.5 72% 88 69 172 97.19
23 (-) Paddy Power Betfair plc 1.8 3% 16 28 N/A -92% N/A 0 3.2 99% 3 87 199 80.40
24 (27) The British Land Company plc 2.3 15% 31 45 -29% 11% 30 54 7.3 1% 23 18 101 95.46
25 (74) Centrica plc 1.7 -38% 15 0 43% 31% 73 87 7.5 -42% 28 0 58 95.26
CGLytics - FTSE100 CEO P4P OVERVIEW (1 to 25)
Getting Read for the next Proxy SeasonGetting Ready for the Next Proxy Season
Rank
ing
2017
(2
015)
11
Stro
ng A
lignm
ent
FTSE 100
2017 Δ 2015-2017 2015-2017
Compensa-tion ReportAGM Vote Outcomes
Total Realised
Compen-sation
(million GBP)
2017 TSR
Com-pen-
sation Ranking
Perfor-mance
Ranking
Growth 2015-2017 TRC
Δ 2015-2017 TSR
Compen-sation
Ranking
Perfor-mance
Ranking
3YR Total Realised
Compen-sation
(million GBP)
3Y TSRCompen-
sation Ranking
Perfor-mance
Ranking
2017 year-end value
of 100 GBP investment
made January 1st, 2015
For%
26 (72) Bunzl plc 2.7 0% 36 20 -51% -9% 9 28 10.7 24% 53 36 124 98.19
27 (10) Whitbread plc 1.9 9% 19 35 2% 15% 52 61 5.9 -11% 13 9 89 99.13
28 (80) Smiths Group plc 1.9 8% 18 34 -48% 19% 11 69 6.7 50% 17 54 150 98.14
29 (58) DCC plc 3.6 26% 52 69 61% -36% 77 6 10.6 120% 51 92 220 94.72
30 (35) J Sainsbury plc 3.1 1% 41 22 31% -9% 68 27 7.1 12% 21 27 112 95.31
31 (29) Schroders plc 5.4 21% 76 57 8% 7% 56 51 14.0 43% 66 51 143 95.83
32 (86) Smith & Nephew plc 3.6 7% 51 32 -37% 4% 20 46 12.2 15% 60 29 115 97.29
33 (48) TUI AG 4.2 38% 63 83 92% 23% 87 76 15.6 60% 70 62 160 92.01
34 (49) Royal Mail plc 1.4 3% 9 29 -7% -4% 44 32 4.4 22% 8 34 122 29.83
35 (94) Burberry Group plc 3.1 23% 40 61 -35% 48% 23 92 22.1 19% 87 30 119 89.24
36 (84) BHP Billiton plc 3.1 22% 39 60 1% 60% 51 94 8.8 35% 38 42 135 97.75
37 (4) Barratt Developments plc 4.9 49% 68 91 -49% 11% 10 53 17.6 63% 77 66 163 99.30
38 (61) Rentokil Initial plc 4.4 45% 66 90 164% 11% 92 55 11.6 175% 56 98 275 96.91
39 (56) The Sage Group plc 3.3 25% 44 67 72% -8% 80 29 6.9 84% 19 80 184 98.12
40 (6) Diageo plc 3.6 33% 53 78 63% 29% 78 82 9.9 61% 49 64 161 97.22
41 (51) JUST EAT plc 3.7 34% 54 80 -8% -26% 41 9 16.6 153% 76 96 253 98.34
42 (20) Mondi plc 2.1 19% 27 53 -57% -11% 5 21 12.1 99% 59 88 199 94.88
43 (92) Rio Tinto plc 3.4 31% 47 74 -14% 62% 35 96 9.3 54% 44 56 154 89.68
44 (59) Micro Focus International plc 2.2 20% 28 56 8% -32% 57 8 5.4 156% 12 97 256 93.13
45 (28) Taylor Wimpey plc 4.1 44% 59 89 -36% -11% 22 22 14.9 79% 69 74 179 98.20
46 (88) Standard Chartered plc 2.0 18% 21 51 -43% 53% 14 93 7.1 -11% 20 8 89 96.66
47 (11) Ferguson plc 1.5 10% 10 41 -29% 7% 29 49 9.2 55% 43 57 155 98.61
48 (19) International Consolidated Airlines Group, S.A. 4.1 52% 62 94 -9% 25% 39 78 11.6 45% 57 52 145 95.07
49 (53) SEGRO plc 3.6 39% 50 84 86% 19% 82 67 9.1 84% 42 81 184 97.42
50 (45) St. James's Place plc 2.6 25% 35 68 -14% -2% 36 36 8.2 65% 33 67 165 99.58
FTSE 100
2017 Δ 2015-2017 2015-2017
Compensa-tion ReportAGM Vote Outcomes
Total Realised
Compen-sation
(million GBP)
2017 TSR
Com-pen-
sation Ranking
Perfor-mance
Ranking
Growth 2015-2017 TRC
Δ 2015-2017 TSR
Compen-sation
Ranking
Perfor-mance
Ranking
3YR Total Realised
Compen-sation
(million GBP)
3Y TSRCompen-
sation Ranking
Perfor-mance
Ranking
2017 year-end value
of 100 GBP investment
made January 1st, 2015
For%
1 (73) Old Mutual plc 3.4 16% 46 46 -13% 18% 37 65 9.6 37% 46 44 137 71.39
2 (46) Severn Trent plc 2.0 1% 23 23 -3% -12% 46 20 6.2 21% 15 33 121 99.34
3 (15) Pearson plc 1.5 -5% 12 11 -19% 0% 33 42 4.2 -27% 9 2 73 99.36
4 (91) Anglo American plc 6.1 37% 80 81 87% 111% 84 99 15.6 41% 71 48 141 90.35
5 (8) The Berkeley Group Holdings plc 27.5 56% 99 97 52% -1% 75 39 53.4 94% 99 86 194 83.91
6 (67) G4S plc 3.4 17% 48 50 38% 33% 70 88 9.0 7% 40 21 107 97.36
7 (85) Marks & Spencer Group plc 1.3 -5% 8 10 -71% -3% 3 35 7.2 -23% 22 4 77 98.70
8 (7) BAE Systems plc 2.1 0% 24 21 -35% -10% 24 24 8.6 37% 35 43 137 98.40
9 (54) Intertek Group plc 11.6 51% 95 92 500% 30% 98 85 18.4 134% 79 94 234 85.38
10 (26) 3i Group plc 6.8 34% 82 79 56% 22% 76 74 18.5 127% 80 93 227 94.29
11 (2) Legal & General Group plc 3.3 17% 45 48 -18% 4% 34 47 10.6 29% 52 39 129 98.17
12 (41) Land Securities Group plc 1.6 -2% 14 17 -43% -20% 12 14 5.9 -4% 14 12 96 98.14
13 (-) Mediclinic International plc 0.9 -15% 2 5 12% N/A 59 N/A 2.5 N/A 1 N/A N/A 93.54
14 (77) Ashtead Group plc 5.4 28% 74 70 28% 30% 66 84 12.9 82% 61 78 182 90.85
15 (43) Coca-Cola HBC AG 9.3 39% 90 85 276% 19% 96 68 13.7 109% 65 91 209 98.95
16 (18) Kingfisher plc 1.6 0% 13 19 0% 6% 48 31 5.3 8% 11 22 108 98.05
17 (16) Johnson Matthey plc 2.1 -1% 26 18 83% 20% 81 70 4.8 -2% 10 14 98 94.60
18 (9) United Utilities Group plc 2.0 -4% 22 13 -36% -10% 21 25 7.5 3% 24 19 103 99.00
19 (38) London Stock Exchange Group plc 4.7 32% 67 77 -42% 7% 16 48 18.8 77% 81 72 177 94.09
20 (39) DS Smith Plc 4.2 31% 64 73 -58% 4% 4 44 19.4 77% 83 71 177 96.79
21 (21) Next plc 1.2 -3% 6 15 -74% -15% 2 18 7.6 -22% 30 5 78 99.25
22 (66) Unilever plc 7.4 29% 83 72 -7% 15% 43 60 23.5 72% 88 69 172 97.19
23 (-) Paddy Power Betfair plc 1.8 3% 16 28 N/A -92% N/A 0 3.2 99% 3 87 199 80.40
24 (27) The British Land Company plc 2.3 15% 31 45 -29% 11% 30 54 7.3 1% 23 18 101 95.46
25 (74) Centrica plc 1.7 -38% 15 0 43% 31% 73 87 7.5 -42% 28 0 58 95.26
12
CGLytics - FTSE100 CEO P4P OVERVIEW (26 to 50)
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Rank
ing
2017
(2
015)
Cons
erva
tive
Prac
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Stro
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lignm
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FTSE 100
2017 Δ 2015-2017 2015-2017
Compen-sation Report
AGM Vote Outcomes
Total Realised
Compen-sation
(million GBP)
2017 TSR
Com-pen-
sation Ranking
Perfor-mance
Ranking
Growth 2015-2017 TRC
Δ 2015-2017 TSR
Compen-sation
Ranking
Perfor-mance
Ranking
3YR Total
Realised Compen-
sation (million
GBP)
3Y TSRCompen-
sation Ranking
Perfor-mance
Ranking
2017 year-end
value of 100 GBP invest-ment made January 1st,
2015
For%
51 (70) EVRAZ plc 4.1 68% 60 99 89% 120% 85 100 9.9 141% 50 95 241 95.79
52 (65) NMC Health Plc 3.9 88% 57 100 493% 4% 97 45 8.4 538% 34 100 638 92.68
53 (44) Croda International plc 3.2 41% 43 86 33% 24% 69 77 7.7 78% 32 73 178 91.28
54 (32) Standard Life Aberdeen plc 1.9 24% 20 64 -39% 21% 19 72 7.6 28% 29 37 128 97.36
55 (5) Intercontinental Hotels Group plc 2.4 32% 32 76 -9% 27% 40 80 8.8 100% 37 89 200 82.33
56 (52) Halma plc 3.1 42% 42 87 39% 14% 71 59 7.6 91% 31 83 191 96.74
57 (64) Admiral Group plc 0.4 16% 0 47 -1% -18% 47 15 1.1 82% 0 77 182 90.36
58 (33) Fresnillo plc 0.8 19% 1 54 0% 26% 49 79 2.5 92% 2 84 192 99.79
59 (24) Smurfit Kappa Group plc 2.2 38% 29 82 -52% 9% 7 52 9.1 46% 41 53 146 88.20
60 (14) Rolls-Royce Holdings plc 1.9 29% 17 71 151% 61% 91 95 4.3 3% 7 20 103 98.87
61 (71) The Royal Bank of Scotland Group plc 1.5 24% 11 65 -41% 47% 18 90 7.5 -30% 27 1 70 99.18
62 (60) Persimmon plc 2.2 63% 30 98 16% 28% 60 81 6.3 105% 16 90 205 51.48
63 (13) Glencore plc 1.1 43% 5 88 9% 111% 58 98 3.4 41% 4 47 141 98.94
64 (12) Antofagasta plc 1.3 52% 7 95 17% 89% 61 97 3.6 39% 5 45 139 99.08
65 (63) Hargreaves Lansdown plc 1.0 52% 3 93 -24% -1% 32 37 4.3 92% 6 85 192 96.57
66 (40) easyJet plc 1.0 54% 4 96 -77% 47% 1 91 7.5 -1% 26 15 99 99.58
67 (96) HSBC Holdings plc 7.5 24% 84 63 -4% 30% 45 86 24.0 52% 90 55 152 97.00
68 (78) Vodafone Group plc 8.0 25% 87 66 63% 20% 79 71 18.9 24% 82 35 124 97.12
69 (57) Informa plc 4.1 9% 61 39 102% -25% 88 11 9.4 83% 45 79 183 93.21
70 (36) National Grid plc 3.1 -3% 38 14 41% -10% 72 23 9.0 10% 39 23 110 96.94
71 (34) SSE plc 2.5 -10% 33 7 50% -9% 74 26 6.8 -3% 18 13 97 97.85
72 (22) RSA Insurance Group plc 5.1 11% 71 42 106% 12% 89 57 11.2 55% 55 58 155 96.63
73 (95) Lloyds Banking Group plc 5.2 14% 73 44 -43% 16% 13 64 20.4 1% 86 17 101 79.22
74 (87) Tesco PLC 3.7 2% 55 24 -8% 23% 42 75 12.0 11% 58 26 111 96.64
75 (25) BT Group plc 2.5 -22% 34 2 -56% -43% 6 3 9.8 -24% 48 3 76 65.84
13
CGLytics - FTSE100 CEO P4P OVERVIEW (51 to 75)
cglytics.com
Rank
ing
2017
(2
015)
Getting Ready for the Next Proxy SeasonCo
nser
vativ
e Pr
actic
eM
isal
igne
d
FTSE 100
2017 Δ 2015-2017 2015-2017
Compen-sation Report
AGM Vote Outcomes
Total Realised
Compen-sation
(million GBP)
2017 TSR
Com-pen-
sation Ranking
Perfor-mance
Ranking
Growth 2015-2017 TRC
Δ 2015-2017 TSR
Compen-sation
Ranking
Perfor-mance
Ranking
3YR Total
Realised Compen-
sation (million
GBP)
3Y TSRCompen-
sation Ranking
Perfor-mance
Ranking
2017 year-end
value of 100 GBP invest-ment made January 1st,
2015
For%
51 (70) EVRAZ plc 4.1 68% 60 99 89% 120% 85 100 9.9 141% 50 95 241 95.79
52 (65) NMC Health Plc 3.9 88% 57 100 493% 4% 97 45 8.4 538% 34 100 638 92.68
53 (44) Croda International plc 3.2 41% 43 86 33% 24% 69 77 7.7 78% 32 73 178 91.28
54 (32) Standard Life Aberdeen plc 1.9 24% 20 64 -39% 21% 19 72 7.6 28% 29 37 128 97.36
55 (5) Intercontinental Hotels Group plc 2.4 32% 32 76 -9% 27% 40 80 8.8 100% 37 89 200 82.33
56 (52) Halma plc 3.1 42% 42 87 39% 14% 71 59 7.6 91% 31 83 191 96.74
57 (64) Admiral Group plc 0.4 16% 0 47 -1% -18% 47 15 1.1 82% 0 77 182 90.36
58 (33) Fresnillo plc 0.8 19% 1 54 0% 26% 49 79 2.5 92% 2 84 192 99.79
59 (24) Smurfit Kappa Group plc 2.2 38% 29 82 -52% 9% 7 52 9.1 46% 41 53 146 88.20
60 (14) Rolls-Royce Holdings plc 1.9 29% 17 71 151% 61% 91 95 4.3 3% 7 20 103 98.87
61 (71) The Royal Bank of Scotland Group plc 1.5 24% 11 65 -41% 47% 18 90 7.5 -30% 27 1 70 99.18
62 (60) Persimmon plc 2.2 63% 30 98 16% 28% 60 81 6.3 105% 16 90 205 51.48
63 (13) Glencore plc 1.1 43% 5 88 9% 111% 58 98 3.4 41% 4 47 141 98.94
64 (12) Antofagasta plc 1.3 52% 7 95 17% 89% 61 97 3.6 39% 5 45 139 99.08
65 (63) Hargreaves Lansdown plc 1.0 52% 3 93 -24% -1% 32 37 4.3 92% 6 85 192 96.57
66 (40) easyJet plc 1.0 54% 4 96 -77% 47% 1 91 7.5 -1% 26 15 99 99.58
67 (96) HSBC Holdings plc 7.5 24% 84 63 -4% 30% 45 86 24.0 52% 90 55 152 97.00
68 (78) Vodafone Group plc 8.0 25% 87 66 63% 20% 79 71 18.9 24% 82 35 124 97.12
69 (57) Informa plc 4.1 9% 61 39 102% -25% 88 11 9.4 83% 45 79 183 93.21
70 (36) National Grid plc 3.1 -3% 38 14 41% -10% 72 23 9.0 10% 39 23 110 96.94
71 (34) SSE plc 2.5 -10% 33 7 50% -9% 74 26 6.8 -3% 18 13 97 97.85
72 (22) RSA Insurance Group plc 5.1 11% 71 42 106% 12% 89 57 11.2 55% 55 58 155 96.63
73 (95) Lloyds Banking Group plc 5.2 14% 73 44 -43% 16% 13 64 20.4 1% 86 17 101 79.22
74 (87) Tesco PLC 3.7 2% 55 24 -8% 23% 42 75 12.0 11% 58 26 111 96.64
75 (25) BT Group plc 2.5 -22% 34 2 -56% -43% 6 3 9.8 -24% 48 3 76 65.84
14
CGLytics - FTSE100 CEO P4P OVERVIEW (76 to 99)
cglytics.com
• Not listed in the table above is FTSE 100 company Scottish Investment Trust plc, which did not have a CEO in 2017• Paddy Power and Mediclinic did not have data for 2015 and were excluded from the ranking position of 2015 and are marked as (-)• Deviation numbers were rounded to the second decimal places
FTSE 100
2017 Δ 2015-2017 2015-2017
Compensa-tion ReportAGM Vote Outcomes
Total Realised
Compen-sation
(million GBP)
2017 TSR Com-pen-
sation Ranking
Perfor-mance
Ranking
Growth 2015-2017 TRC
Δ 2015-2017 TSR
Compen-sation
Ranking
Perfor-mance
Ranking
3YR Total Realised
Compen-sation
(million GBP)
3Y TSRCompen-
sation Ranking
Perfor-mance
Ranking
2017 year-end value
of 100 GBP investment
made January 1st, 2015
For%
76 (93) Randgold Resources Limited 6.3 17% 81 49 2% 21% 53 73 20.4 74% 85 70 174 92.28
77 (42) ITV plc 2.9 -15% 37 4 -32% -49% 27 1 11.0 -8% 54 10 92 96.23
78 (83) AstraZeneca plc 9.4 21% 91 58 21% 15% 63 63 30.6 29% 93 38 129 65.06
79 (75) Royal Dutch Shell A plc 7.9 18% 86 52 193% 42% 95 89 13.4 42% 64 50 142 74.78
80 (81) RELX plc 11.8 23% 96 62 -25% 11% 31 56 40.2 70% 97 68 170 83.62
81 (23) Aviva plc 5.2 9% 72 38 21% -1% 65 38 13.2 19% 62 31 119 97.13
82 (79) Associated British Foods plc 4.2 4% 65 30 -34% -3% 25 34 13.2 -7% 63 11 93 98.35
83 (89) Prudential plc 9.7 20% 92 55 21% 15% 64 62 29.6 39% 92 46 139 94.91
84 (62) Carnival plc 22.4 22% 98 59 1426% -14% 99 19 29.3 81% 91 76 181 92.40
85 (3) Barclays plc 3.5 -8% 49 8 90% 0% 86 41 9.7 -11% 47 7 89 95.96
86 (68) Compass Group plc 5.6 9% 77 36 5% -1% 54 40 15.8 56% 72 60 156 96.58
87 (31) Direct Line Insurance Group plc 5.7 8% 78 33 5% -40% 55 5 16.0 58% 73 61 158 76.58
88 (17) Experian plc 5.9 5% 79 31 31% -8% 67 30 14.5 60% 67 63 160 81.37
89 (97) BP plc 8.8 10% 88 40 -33% 18% 26 66 31.4 56% 94 59 156 96.42
90 (47) Imperial Brands PLC 4.0 -6% 58 9 18% -40% 62 4 14.5 29% 68 40 129 98.48
91 (30) British American Tobacco plc 11.1 13% 94 43 134% 1% 90 43 23.9 62% 89 65 162 75.68
92 (1) Wm Morrison Supermarkets plc 5.0 -2% 69 16 191% 12% 94 58 8.6 33% 36 41 133 84.66
93 (90) Shire plc 3.8 -16% 56 3 -51% -20% 8 13 19.6 -13% 84 6 87 89.13
94 (69) Reckitt Benckiser Group plc 9.3 3% 89 27 -42% -20% 15 12 35.2 42% 96 49 142 89.03
95 (55) Melrose Industries plc 42.8 9% 100 37 4508% -3% 100 33 44.7 344% 98 99 444 77.13
96 (82) GlaxoSmithKline plc 5.0 -11% 70 6 -29% -16% 28 16 16.5 14% 74 28 114 90.41
97 (37) Sky plc 10.4 2% 93 26 -9% -25% 38 10 31.5 20% 95 32 120 70.99
98 (50) CRH plc 7.6 -4% 85 12 184% -35% 93 7 18.0 84% 78 82 184 60.31
99 (76) WPP plc 15.5 -23% 97 1 -78% -43% 0 2 132.1 10% 100 24 110 72.75
Rank
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Getting Ready for the Next Proxy SeasonM
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15
AppendixOur methodology on Total Realised Compensation explainedThe realised compensation includes all realised components of compensation in the year of interest. It is defined as the sum of total indirect
compensation realised and total direct compensation realised for one year. It consists of base salary + benefits + other compensation + bonus +
deferred cash bonus + deferred share bonus + value of performance/restricted shares vested + value of performance/restricted options exercised.
Total realised pay is calculated based on performance indicators that have been met during the performance period. Most companies clearly disclose
the performance period and vesting period, and the percentage that will be paid in the next year. For example, for shares that will vest on March 31,
2016 but where the performance period ends at December 31, 2015, shares are included in realised compensation for the financial year 2015. When
the company doesn’t disclose the average share price over the last quarter, we use the company year-end share price to calculate the value of the
vested multiyear share packages. In line with UK practices, adjustments are usually made in the following year when the company disclose the exact
share price on which the shares vested. For options, we calculate realised pay when the options have actually been exercised. In the event there were
two CEOs in a year for a company, for example due to a change in CEO, we explored the companies on individual basis and annualized compensations
depending on the issue at hand to make the total realised compensation as realistic as possible.
Total Shareholder Return (TSR) Total shareholder return is defined as the total return of a stock to an investor. It combines annual changes in stock price and dividends paid, and is expressed
as an annualised percentage. This is calculated over one-year (1Y) and three-year (3Y) period. The growth in 3Y TSR is calculated by the percentage points of
difference between the latest year and 3 years prior. Please note that all figures have been rounded up in the table outlining the CEO pay for performance
analysis.
CGLytics - FTSE100 CEO P4P Overview explainedThe methodology was based on a degree of alignment between +20% or -20%. Companies that fell between this range are considered to be strongly
aligned and were ranked from lowest to the highest with reference to their degree of deviance from the regression line. The next companies in the
overview are those with their degree of deviation above 20%. These companies are considered to have a more conservative policy, with performance
ranking higher than compensation. At the bottom of the ranking are the companies whose degree of deviation falls below -20%. The companies that
fall in this category are considered to have an aggressive policy, with compensation ranking higher relative to performance (TSR). All companies were
ranked from lowest to highest level of deviation from the regression line with reference to 2017 compensation. The ranking also shows how the FTSE
100 index has changed relative to 2015 using the methodology explained above.
Investment return of GBP 100
This figure looks to calculate how much a GBP 100 company investment would be worth over a period of time by indexing the TSR over multiple years.
Pay for Performance analysisWe conducted a study on CEO realised compensation to determine degree of alignment relative to peers in the FTSE 100 on a 1 and 3 years basis. The
degree of alignment is determined by subtracting the compensation rank from the performance rank within a scope of +20% or -20%. Results obtained
on either side determine a more generous or a conservative remuneration policy. Therefore, for the three years’ study, the percentile rank is calculated
by the Total Realised Compensation over the period subtracted from the sum of the period TSR performance.
Definition of financial years FTSE 100 companies have different year end dates. The most common year end dates are displayed below; 31/12, 31/3, 31/7 and 30/9. The main rule
applied is that in a specific year, financial year end dates until 31/3 is reported as financial year of the previous year. All financial year end dates after
31/3 are reported as the year in which the financial year ends.
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