The Seeds of Shareholder Discord in 2024: Executive Remuneration and ESG Targets

The 2024 European proxy season in Spain illuminated a variety of themes that showcase investors’ voting behaviors and stakeholder expectations, as illustrated in the latest Sodali & Co Annual Proxy Season Review, explored in the article published by the Spanish magazine Consejeros. 

According to the report, 94% of Ibex-35 shareholders' meetings were hybrid in 2024 (in-person and virtual), with stable quorums reaching 73.3%. Floating shareholder participation slightly declined to 48.2%. Floating shareholders were less active, with only 56.1% voting, but they remain crucial for approvals. Proxy advisors and ESG rating agencies are closely monitoring voting discrepancies as indicators of good governance.

Board member elections followed previous patterns, with internal nominations (9.9%) receiving more adverse vote recommendations and higher dissent ratios. External affiliation directors (36%) had fewer dissenting votes, while independent candidates (54.1%) were the most endorsed. Gender diversity policies faced scrutiny, with only one opposition vote recommendation from proxy advisors in 2024.

Women's representation on boards increased to 42.25%, with most companies structuring boards of up to 15 members. The most contentious issue was board compensation, with high opposition to remuneration policies and LTIPs.

ESG targets in executive variable remuneration were particularly controversial, with 69% of companies including them and 87.9% preferring bonuses.

Eduardo Sancho Garcia, Manager at Sodali & Co, highlights in his interview with Consejeros, that despite SHRD and shareholder engagement policies, Ibex-35 companies can still increase floating shareholder participation, which averaged 56% in 2024. Floating shareholders hold 62% of company ownership.

"Board elections show strong support for independent directors, with Ibex-35 boards being 56% independent. However, executives dominate among presidents (48%). Gender diversity has improved, reaching 40% for the less represented gender, though 24% of boards have not yet achieved this. Executive remuneration remains the most controversial issue, attracting objections from global proxy advisors and dissent from floating shareholders," comments Eduardo.