LONDON // It is midsummer in the United Kingdom and it is not just the social season that is in full swing.
For the corporate world, there is the annual meeting season to endure.
Every year, all of the companies listed on the UK’s stock market are obliged to hold a gathering where shareholders can come and ask questions of the executives and generally take the management of “their” company to task.
In the next week or so, two of the UK’s most scrutinised companies will hold their annual general meetings – Tesco and the Argos owner Home Retail Group, which will soon be swallowed by Sainsbury’s.
This month, IAG, the owner of British Airways, and WPP, the world’s biggest advertising company, took their turns.
For the media, there is usually only one story to focus on: that of executive pay. In the UK in recent years, opposition has been increasing to executive rewards that are deemed excessive.
Banks, miners, energy groups and housebuilders have all been in shareholders’ sights this year, as investors say that the rewards executives are receiving are out of kilter with company performance and the general economy. By June 8, no fewer than 21 leading British companies had faced a significant rejection of remuneration policy.
Back in April, the annual meeting season kicked off with a protest against the £14 million (Dh75.2m) pay package of Bob Dudley, the chief executive of BP, followed quickly by a slightly smaller rebellion against the pay of Iain Conn, the chief executive of Centrica, the owner of British Gas.
Weir, the Scottish engineering group that supplies the oil and gas sector, saw more than 72 per cent of its shareholders vote against its proposals to bring in a lucrative pay scheme for executives.
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Governance in focus
■ Awareness: UAE companies increasingly aware of gains to be had
■ Management: Know your requirements before you set up a board
■ Virtual AGMs: When the AGM is everything but personal
■ Editor's letter: An issue important to our well-being
■ History: Be good, because investors are watching more closely
■ Poll: Corporate governance in the UAE - have your say
■ Analysis: A good board brings right mix of knowledge and culture
■ Gender equality: 30% Club GCC chapter to boost women numbers on company boards
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Also this month, a third of investors in WPP voted against its chief executive’s record payout of £70m. Sir Martin Sorrell will still receive his rewards, however, as this vote, like that at BP and others before it, was non-binding.
Sir Martin’s pay will now face a binding vote at next year’s AGM, when investors agree a new remuneration scheme. The asset manager Hermes, a 1.2 per cent shareholder, said before the vote that it would not be supporting the remuneration package because it had concerns about the “remuneration committee’s apparent lack of vigour and stress-testing”.
To be significant, a protest has to be led by an institution. In practice, the institutional shareholders rarely turn up but their displeasure is expressed to the company in the form of a vote against, or abstention from, the remuneration policy.
Meanwhile, at the actual meetings, companies are increasingly being targeted by “professional activists” who try to create stunts, which can be filmed and spread online. Greenpeace, the environmental organisation, holds training events to teach campaigners how to conduct such stunts.
People still talk about Cedric the pig, the 20-stone pig who turned up at British Gas’s 1995 annual meeting in London’s Docklands as part of a protest against the controversial chief executive Cedric Brown’s pay.
G4S, the security firm, has seen its annual meetings descend into chaos for the past two years, despite a heavy security presence. In 2015, the company’s supply of security and screening equipment to the Israeli security services dominated a meeting during which only a small number of the questions from the floor focused on its financial performance.
The aerospace company BAE Systems has had similar protests for years, while miners and oil companies routinely face protests from environmental groups. This year BAE held its annual meeting in Farnborough in Hampshire, about 50 kilometres from London, which is close to some of its offices but is also hard enough to reach to deter less determined activists.
In 2009, cabin crew unions brought cages of live lemmings to British Airways’ annual meeting in protest over job cuts and pay freezes.
“Central London venues are preferred by shareholders, but if companies say they are going to ‘tour’ their annual meeting, you can be sure it is to try and deter people from coming,” says one company communications adviser.
If anyone has been asking questions about sustainability, the supply chain, fair tax policy or pay during the year, then the AGM is the opportunity for people who care strongly to make their point.
“The challenge with AGMs is that an individual with a particular gripe can stand up and say something explosive, without receiving much scrutiny about whether it is justified or not. The more colourful the language, the more likely it is to be reported,” says Giles Croot, the director of communications and investor relations at the UK infrastructure multinational Balfour Beatty.
Some companies are so concerned about the activities of certain groups that might target their meeting that they use private investigators to monitor what they get up to, sometimes to the extent of infiltrating the groups themselves.
Watching the social media activities of known campaigners is another way to prepare for disruption, as they typically put their escapades and stunts online.
Drax, the power station operator that burns both coal and compressed wood pellets to generate some 8 per cent of the UK’s electricity, has been a target of protesters for the past decade.
At its most recent AGM in the City of London in April, about 20 shareholders came into the meeting, about two thirds of them protesters with either a single or proxy vote.
The crowd outside carried banners and home-made dinosaur puppets – their message was that Drax was a dinosaur.
Past attempts to disrupt Drax meetings have included a shareholder who came in wearing a Velcro suit, which he planned to rip off to reveal his bear costume – the message was that Drax was preventing bears from doing what they would naturally do in the woods.
He was not successful.
There is always a visible security presence at the company’s meetings and it has a close relationship with the City of London police.
Andrew Brown, the director of communications at Drax, is wary of talking about some of the protesters’ stunts but admits he is sometimes impressed by their creativity.
“We don’t allow people to grandstand: they have to ask a question and then we try to respond in as much detail as we can. The sustainability of our operations is fundamental to the success of our business. We have nothing to hide and welcome any opportunity to correct the misinformation which exists about our sourcing of wood pellets.”
But the one thing that really engages or enrages shareholders is a little more prosaic than return on investments or environmental issues: food – particularly the lack of it.
In April in Germany, police were called to the DaimlerChrysler annual meeting after a fight over free sausages turned ugly.
The company served about 12,500 sausages to the 5,500 shareholders at the meeting for lunch, alongside bread rolls, wraps, potato soup and potato salad, followed by cake in the afternoon. But a female shareholder was unhappy that one man was taking more than his fair share. The chairman of the company, Manfred Bischoff, concluded: “We either need more sausages or we get rid of them altogether.”
It is a solution that most British companies adopted a while back.
Marks & Spencer infuriated its shareholders when it swapped a lavish buffet for a goody bag containing £6.59 worth of refreshments a few years ago.
These days, shareholders at many firms are lucky to get a biscuit and a cup of tea.
“I don’t see why we should pay what is effectively a special dividend for shareholders who live within the M25,” says one director of communications.
“We don’t want to encourage them to linger,” says another.
Indeed, why would pampered executives on mega-salaries want to endure the wrath of disgruntled shareholders any longer than is strictly necessary?
business@thenational.ae
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
Company%20Profile
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Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The Kites
Romain Gary
Penguin Modern Classics
BELGIUM%20SQUAD
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
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Our legal advisor
Ahmad El Sayed is Senior Associate at Charles Russell Speechlys, a law firm headquartered in London with offices in the UK, Europe, the Middle East and Hong Kong.
Experience: Commercial litigator who has assisted clients with overseas judgments before UAE courts. His specialties are cases related to banking, real estate, shareholder disputes, company liquidations and criminal matters as well as employment related litigation.
Education: Sagesse University, Beirut, Lebanon, in 2005.
The%20specs
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COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
Game Changer
Director: Shankar
Stars: Ram Charan, Kiara Advani, Anjali, S J Suryah, Jayaram
Rating: 2/5
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
Guide to intelligent investing
Investing success often hinges on discipline and perspective. As markets fluctuate, remember these guiding principles:
- Stay invested: Time in the market, not timing the market, is critical to long-term gains.
- Rational thinking: Breathe and avoid emotional decision-making; let logic and planning guide your actions.
- Strategic patience: Understand why you’re investing and allow time for your strategies to unfold.
What went into the film
25 visual effects (VFX) studios
2,150 VFX shots in a film with 2,500 shots
1,000 VFX artists
3,000 technicians
10 Concept artists, 25 3D designers
New sound technology, named 4D SRL
SPECS
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RESULTS
5pm: Rated Conditions (PA) Dh85,000 (Turf) 1,600m
Winner: AF Mouthirah, Tadhg O’Shea (jockey), Ernst Oertel (trainer)
5.30pm: Maiden (PA) Dh80,000 (T) 1,400m
Winner: AF Alajaj, Tadhg O’Shea, Ernst Oertel
6pm: Wathba Stallions Cup Handicap (PA) Dh70,000 (T) 1,400m
Winner: Hawafez, Connor Beasley, Abubakar Daud
6.30pm: Maiden (PA) Dh80,000 (T) 2,200m
Winner: Tair, Fabrice Veron, Eric Lemartinel
7pm: Handicap (PA) Dh80,000 (T) 2,200m
Winner: Wakeel W’Rsan, Richard Mullen, Jaci Wickham
7.30pm: Handicap (PA) Dh100,000 (T) 2,400m
Winner: Son Of Normandy, Fernando Jara, Ahmad bin Harmash
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
WITHIN%20SAND
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German intelligence warnings
- 2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
- 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
- 2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250
Source: Federal Office for the Protection of the Constitution
MATCH INFO
Uefa Champions League semi-finals, first leg
Liverpool v Roma
When: April 24, 10.45pm kick-off (UAE)
Where: Anfield, Liverpool
Live: BeIN Sports HD
Second leg: May 2, Stadio Olimpico, Rome
The biog
Favourite films: Casablanca and Lawrence of Arabia
Favourite books: Start with Why by Simon Sinek and Good to be Great by Jim Collins
Favourite dish: Grilled fish
Inspiration: Sheikh Zayed's visionary leadership taught me to embrace new challenges.
Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
COMPANY%20PROFILE
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COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
The specs: 2019 Subaru Forester
Price, base: Dh105,900 (Premium); Dh115,900 (Sport)
Engine: 2.5-litre four-cylinder
Transmission: Continuously variable transmission
Power: 182hp @ 5,800rpm
Torque: 239Nm @ 4,400rpm
Fuel economy, combined: 8.1L / 100km (estimated)
MADAME%20WEB
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