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AGM poll results 2016

2016 AGM Voting

At the Annual General Meeting of Smith & Nephew plc held on Thursday, 14 April 2016 a poll was held for each resolution. The table below shows the number of votes received for and against each resolution together with the votes validly cast, both as a total and as a proportion of the relevant issued share capital.

Adobe Acrobat PDF icon Notice of the Annual General Meeting is contained here.(PDF 900KB)




Resolution

For/
Discretion (Number of
votes)

Percent For/
Discretion (%)

Against (Number
of votes)

Total votes validly cast

Percentage of relevant shares
in issue
(%)

Withheld
(Number of votes)

1. To receive and adopt the audited accounts

 631,479,299 99.99 70,136 631,549,435 70.51

1,712,958

2. To approve the Directors’ remuneration report (excluding policy)

272,923,229 46.99 307,890,596 580,813,825 64.85

52,448,566

3. To declare a final dividend

633,044,503 99.99 47,587 633,092,090 70.68 170,303
4. To re-elect Vinita Bali 626,444,216 98.97 6,508,156 632,952,372 70.67 309,145

5. To re-elect Ian Barlow

631,099,788

99.71

1,855,177

632,954,965 70.67

307,427

6. To re-elect Olivier Bohuon

627,715,177 99.17 5,237,404  632,952,581 70.67
309,811

7. To re-elect The Rt. Hon Baroness Bottomley of Nettlestone DL

628,118,295 99.23 4,848,061

632,966,356

70.67

296,037

8. To re-elect Julie Brown

626,917,710  99.05

6,022,024

632,939,734 70.67
322,658

9. To re-elect Erik Engstrom

631,471,358 99.77 1,434,338  632,905,696 70.66 356,697 

10. To elect Robin Freestone

630,631,405 99.64 2,282,040  632,913,445 70.66
 348,948

11. To re-elect Michael Friedman

629,102,601 99.40 3,827,947  632,930,548 70.66
331,843

12. To re-elect Brian Larcombe

611,956,966 96.81 20,153,487 632,110,453 70.57 1,151,939
13. To re-elect Joseph Papa 613,133,671 97.54 15,450,120 628,583,791 70.18 4,678,600

14.To re-elect Roberto Quarta

623,320,236  98.55 9,174,439 632,494,675 70.62 767,718

15. To re-appoint KPMG LLP as the Auditor

627,578,788

99.84 981,253 628,560,041 70.18 4,702,351

16. To authorise the Directors to determine the remuneration of the Auditor

632,491,553

99.94

378,237

632,869,790

70.66

392,603
17. To renew the Directors' authority to allot shares  622,400,709 98.34  10,534,835  632,935,544  70.67  326,849 


Special resolutions

18. To renew the Directors’ authority for the disapplication of the pre-emption rights

573,758,792 93.69  38,660,179 612,418,971  68.37

20,843,420

19. To renew the Directors’ limited authority to make market purchases of the Company’s own shares

 628,940,015 99.39  3,851,185 632,791,200 70.65 

471,192

20. To authorise general meetings to be held on 14 clear days’ notice

535,087,474

84.55

97,787,969

632,875,443

70.66

386,949

 

The number of Ordinary Shares in issue on 12 April 2016 at 6pm (excluding shares held in Treasury) was 895,684,064. Shareholders are entitled to one vote per share.  A vote withheld is not a vote in law and is not counted in the calculation of the proportion of votes validly cast.

 

A copy of the Resolutions passed as Special Business at the Annual General Meeting is being submitted to the UK Listing Authority and will shortly be available for inspection at the National Storage Mechanism document viewing facility at: http://www.morningstar.co.uk/uk/nsm

 

 

The Board notes that Resolution 2 to approve the remuneration report has received a significant number of votes cast against it (307,890,596 votes, 53.01% of votes validly cast). In addition, the holders of 52,448,566 shares withheld their votes.

 

Joseph Papa, the Chairman of the Remuneration Committee undertook an extensive engagement programme with shareholders ahead of the Annual General Meeting and has discussed this outcome and shareholder views with the Remuneration Committee and the Board over the past few days. The Board notes that shareholders concerns are focused mainly around the use of discretion exercised by the Remuneration Committee when determining the vesting of the proportion of the Performance Share Awards subject to the Total Shareholder Return (TSR) measure. We contacted the holders of around half our shares when we posted the Annual Report. Since then, around a quarter of our shareholders have contacted us to let us know their voting intentions and Mr Papa has discussed the process the Remuneration Committee went through in reaching its decision with most of these investors. Mr Papa also spoke to the Investment Association and Institutional Shareholder Services, organisations which analyse Company annual reports and make voting recommendations and seek views from their members. 

 

A significant number of shareholders were supportive of the Remuneration Committee’s use of discretion, recognising that during the three year performance period, shareholders had enjoyed an excellent 80% absolute return, well ahead of the FTSE 100 at 20%, whilst the executives who had created that success would have received no reward in respect of TSR had the Remuneration Committee not exercised its discretion. This exercise of discretion resulted in a total payout of £2.1 million shared between around 60 senior executives. Nevertheless, a significant number of shareholders were opposed to the use of upwards discretion on principle, independent of their views of the performance of the Company.

 

We recognise that the use of discretion is a matter where there is considerable divergence of opinion. In spite of the voting outcome, the Remuneration Committee and indeed the Board unanimously believe that in these particular circumstances the Remuneration Committee made the right decision in aligning executive reward to the shareholder experience. It did not take the decision lightly and considered the position over a number of meetings, looking at multiple different scenarios. The use of discretion in 2016 is not intended to create a precedent for future years, but was used to address a particular anomaly arising as a result of losing three companies from the TSR peer group due to market consolidation during the performance period. Mr Papa had met with a number of major shareholders at the end of 2015 to discuss how this matter should be addressed. The overwhelming response from the shareholders he met was that substituting new companies for the companies which had fallen out of the peer group, in accordance with the Plan Rules which had been drafted to accommodate potential industry consolidation, would not be appropriate. Instead the feedback from some of these shareholders was that it would be better for the Remuneration Committee to exercise their discretion, which was exactly what they did.

 

Looking ahead, as mentioned in our 2015 Annual Report, the Remuneration Committee is undertaking a thorough review of remuneration arrangements during 2016, ahead of putting a revised Remuneration Policy to shareholder vote in 2017. Over the summer, they will consult with a broad range of shareholders to solicit their views on how best to align executive reward with shareholder interests.

 

We thank the shareholders, the Investment Association and Institutional Shareholder Services who have engaged with us to debate the issues which the Remuneration Committee has faced.

 

 

Susan Swabey

Company Secretary

Smith & Nephew plc

 

Tel:  +44 (0)20 7401 7646