Emerging governance trends in 2021

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  • Board composition remains the largest motivator for dissenting votes.
  • COVID-19 continues to feature heavily with fixed remuneration pay cuts for directors and executives.
  • Five of the 55 ASX300 companies were forced to respond to activist shareholder resolutions with climate change was the focus in all instances.

As move into the final quarter of 2021, it is timely to reflect upon emerging governance trends from the first half of 2021 and understand how this information can inform and influence activity throughout the remainder of the year.

With 55 ASX300 companies having presented their full year results and company strategy to shareholders at AGMs between January and June 2021, we saw three key trends emerge, including director elections, remuneration and shareholder activism, especially climate change.

Directors up for re-election

Average support for director elections improved in the 2021 mini-season at 96.2 per cent, up from 93.2 per cent in the previous corresponding period. There was also a decrease in the number of directors receiving less than 90 per cent support, down from 19 directors to only seven in 2021. Four of those received less than 80 per cent, down from five during the previous period.

Board composition remains the largest motivator for dissenting votes. Composition includes elements such as:

  • Majority independence, as judged by tenure, related party transactions, ownership levels and previous work experience with the company;
  • Gender diversity under 30 per cent with limited disclosure or visible strategy towards improvement; and
  • Audit and Remuneration committee independence.

Proxy advisers remain hesitant to recommend support of directors who are potentially time constrained. This includes directors holding more than five non-executive director seats on publicly listed companies or juggling executive positions and more than one non-executive director seat[i] .

This flows into the voting outcomes for these directors and ‘overboarding’ remains a significant motivator for director dissent.

Boards, and therefore directors, are also responsible for the governance and risk management of the company. It is fair and foreseeable that incumbent directors will be held accountable where governance and risk management practices fall short of shareholder and community expectations. This increasingly includes an assessment of the Board’s oversight and commitment to climate risk disclosures and performance. We also saw large index fund BlackRock vote against the re-election of directors for failure to adequately disclose climate risk strategy.

Insight #1: Gender Diversity

20% of institutional asset owners and investors have committed themselves and their portfolios to the 30% Club, aiming for 30 percent female board representation on ASX300 companies by the end of 2021.
A further 6% have signed up to the 40:40 Vision striving for gender balanced executive teams in the ASX200 by 2030. Discover further insights in the Georgeson institutional investor research below*.


The integration of climate or ESG metrics into STI and LTI performance metrics and hurdles remain complicated, with no consensus as to how this can be effectively managed.



The two-strikes rule puts Australian corporates on notice for remuneration practices. Pleasingly for ASX300 issuers with AGMs in the first half of 2021, there were no second strikes delivered. In fact, there were slightly higher levels of support for the remuneration report at 93.9 per cent versus 93.6 per cent in the prior period.

COVID-19 continued to feature heavily in Annual Report remuneration disclosures with fixed remuneration pay cuts for directors and executives reflecting negative outcomes for shareholders across some industries. It is this alignment of pay and performance that is most keenly reviewed by proxy advisers and investors alike. The other remuneration practices that remain contentious include:

  • Retesting of hurdles to effect a more favourable outcome for executives;
  • Excessive termination benefits
  • Long-term incentive (LTI) performance periods that are too short to reflect the long-term strategy of the business[i]
  • Short-term incentives (STI) that are greater than long-term incentives, with the potential to skew alignment to shareholders.

The use of retention bonuses has been viewed in mixed light by proxy advisers. It appears with adequate disclosures, consultation and justification, proxy advisers may apply discretion in their approval of retention schemes.

The integration of climate or ESG metrics into STI and LTI performance metrics and hurdles remain complicated, with no consensus as to how this can be effectively managed. In the absence of a settled market view, companies should consider how the ESG measures they have chosen work to incentivise the creation of shareholder value and preservation. Articulation of how performance will be measured, and transparency of performance is key to the inclusion of non-financial or subjective measures.

Insight #2: Proxy adviser reports

80% of institutional investors reference one or more proxy adviser reports when making voting decisions. 34% reference two or more reports. While some investors vote in alignment with specific proxy adviser recommendations, there are plenty of investors using these recommendations to supplement their own research.

Shareholder resolutions

Five of the 55 ASX300 companies were forced to respond to activist shareholder resolutions. Climate change was the focus in all instances:

  • Disclosure of Paris-aligned capital and operational expenditure
  • Reducing investments and underwriting exposure to fossil fuel assets
  • Annual shareholder vote on companies’ Climate Report, also known as a ‘Say on Climate’ vote.

This is the first year that we have seen Boards supportive of the ‘Say on Climate’ resolution. For Rio Tinto, their management support resulted in the resolution passing with 99 per cent shareholder support, while other companies including Santos, Woodside Petroleum and Oil Search had their shareholder resolutions withdrawn after committing to a 2022, non-binding, Board-supported, ‘Say on Climate’ vote.

The repercussions of dissent on a non-binding ‘Say on Climate’ resolution remains unclear but the message to management and the Board will be unequivocal – demonstrate transparency, commitment and progress towards reducing carbon emissions in alignment with the Paris Agreement, or risk further dissent in other areas of your AGM agenda.

Insight #3: Climate change

78% of institutional investors in the Georgeson analysis are signatories to the UN Principles for Responsible Investment.
48% have signed the Climate Action 100+ initiative. Worldwide, the initiative has 570 investors responsible for over $54 trillion in assets under management engaging with portfolio companies on climate-related issues.

Beyond Australia

The mini-season can provide companies with an indication of investor voting trends and proxy recommendations in action. Further insights can be found by looking overseas at the North American proxy season.

The mini-season can provide companies with an indication of investor voting trends and proxy recommendations in action.


Recent research published by Georgeson highlights the changing nature of shareholder proposals and outcomes in the Russell 3000 index during the recent proxy season.[i]

  • A total of 30 environmental and social proposals have already passed, the highest number on record and a 50 per cent increase compared to the total number of such proposals receiving majority support during the 2020 proxy season
  • More than one-third of environmental shareholder proposals voted on to date have passed
  • The election of three dissident directors occurred, on the basis of investors’ climate concerns, including support from BlackRock, Vanguard and State Street
  • Record-breaking support for shareholder proposals focused on plastic pollution, political contributions and board diversity; and > A sizeable increase in negotiated settlements of shareholder proposals as compared to the 2020 and 2019 proxy seasons.


With the main AGM season looming, the 2021 mini-season provides a sneak peek at the emerging trends. Given the fundamental shift in investors’ consideration of ESG risks and opportunities in voting decisions, companies would be well-served to better understand their specific investors’ ESG expectations generally, particularly those relating to climate change, diversity and inclusion, and political spending.

*About the insights in this article

The analysis above includes ASX300 companies with AGMs held between January and June 2021. The insights throughout the report are based on a Georgeson study of Australia’s top 110 institutional investors and asset owners — an extension of the Georgeson ESG Whitepaper that was released in June 2021. Our research leverages our proprietary institutional investor database and involved two lenses of analysis: (1) the daily interactions we and our clients have with these investors as part of the engagement process and (2) investors’ public disclosures.

About Georgeson

Georgeson, a Computershare company, is a trusted governance adviser that helps organisations across the globe maximise the value of relationships with their investors and stakeholders. By providing, strategic shareholder engagement, proxy solicitation, governance consulting and ESG advisory services, Georgeson works with issuers to de-risk the AGM process and ensure a well-informed and well-participated vote.

Let Georgeson help you secure successful outcomes at your next AGM. Talk to us today (02) 8216 5700.

[1] This policy differs between proxy advisers, with CGI Glass Lewis applying the stricter hurdle of four public Boards if they are in the ASX100. Note Chair positions are counted as the equivalent of two board positions for both CGI Glass Lewis and ISS.

[1] Proxy advisers are advocating for five-year performance periods.

[1] Orowitz H, Torressen T, & Maiolo M, July 5 2021, Early Insights to 2021 Annual General Meetings Annual Corporate Governance Review. Retrieved from Harvard Law School Forum on Corporate Governance: https://corpgov.law.harvard.edu/2021/07/05/earlyinsights-to-2021-annual-general-meetings-annual-corporategovernance-review/