Pearson PLC
Results of Annual General Meeting on 26 April 2024 - Update
Statement
In accordance with the UK Corporate
Governance Code, Pearson plc ("Pearson" or the "Company") is
providing this update following the outcome of the Annual General
Meeting ("AGM") on 28 April 2024.
The Board very much appreciated the
ongoing support from our shareholders, with all resolutions passed.
However, we noted that a significant minority voted against the
2023 Director's Remuneration Report (30.17%) and the re-election of
the Remuneration Committee Chair (28.16%).
We welcomed the support of over two
thirds of our shareholders for these two resolutions and we were
also pleased to receive support from IVIS and Glass Lewis. We also
acknowledge that both resolutions were opposed by ISS, which we
believe influenced a significant portion of the vote against, in
particular from smaller institutional holders who may follow this
recommendation for their voting.
Whilst the company had, prior to the
AGM, met with a significant proportion of its ownership in terms of
holdings and had a good understanding of the reasons both for and
against its remuneration proposals, in light of the outcome at the
2024 AGM and given the Company's commitment to an ongoing and
transparent dialogue with shareholders and their advisers, and in
line with the requirements under the UK Corporate Governance Code,
a further engagement exercise was initiated. This helped
ensure we had captured as much feedback about the voting outcomes
as possible, and extended the opportunity for shareholders to
provide any new or further feedback on Pearson's approach to
remuneration more generally. The results of this engagement can be
summarised as follows:
·
The Company wrote to the top 100 shareholders,
comprising c.83% of the register, to offer a meeting. This expanded
our coverage from previous engagement programmes. We have received
written feedback from 11 shareholders and the Committee Chair has
participated in six meetings with shareholders to date. We have
also met with certain proxy agencies and other representative
groups. A number of shareholders responded to state that there was
no need for engagement given the extensive previous consultations
on Pearson's current remuneration arrangements.
·
The feedback received has reconfirmed that there
remains a diverse range of views in our shareholder base with
respect to executive pay. The majority of those that we
engaged with during this exercise indicated continued support for
the approach we have taken.
·
Some shareholders, as well as ISS, retained
concerns around the implementation of the increases to variable
incentive opportunities introduced as part of the Remuneration
Policy approved by shareholders at the 2023 AGM. In addition, there
was a perception from ISS, that implementing the new Policy
immediately after shareholder approval at the 2023 AGM, represented
a failure to adequately engage with and listen to shareholders, in
light of that vote in 2023.
·
However, the Company had consulted widely in
developing the Policy in early 2023 and had refined the final
proposals in response to the feedback received at that time. The
Policy was then implemented following approval at the 2023 AGM on
the basis that it was supported by the majority of shareholders,
including almost all major holders who engaged with Pearson
throughout the review. The Company was aware, at the time of that
implementation and, as recognised in the Directors' Remuneration
Report that year, there was a range of views among our shareholder
base, such that a significant vote against the policy was a
possibility. Notwithstanding this, the Company proceeded with the
implementation of the approved Policy because the Board continued
to believe that it was necessary for remaining competitive in the
global talent market and to drive sustainable, profitable growth at
Pearson. Critically, that view was reaffirmed later in 2023 when it
was instrumental in securing the appointment of Omar Abbosh as the
new Chief Executive. Without the new Policy, we do not believe we
would have been able to compete to hire a leader of Omar's
calibre.
·
The Board is committed to ensuring Pearson has an
executive remuneration structure that allows us to be competitive
in the global talent market and ensures strong alignment between
pay and performance. During the most recent engagement
exercise, a number of shareholders informed the Company that they
now more fully understand the talent markets Pearson competes in
(and by extension the rationale underpinning the Remuneration
Policy) as a result of this engagement, but considered this could
be explained in greater detail in the Directors' Remuneration
Report.
·
Finally, some investors had ongoing concerns over
the legacy Co-Investment Plan for the previous Chief Executive and
felt unable to vote in favour of the Directors' Remuneration Report
in part because of this. The Co-Investment Plan has now concluded,
with no further tranches to vest and no new awards to be made (it
was not retained as part of the 2023 Policy).
·
In relation to the minority vote against the
re-election of the Remuneration Committee Chair, the Board
understands that the ISS recommendation to vote against this
resolution strongly influenced the voting outcome and was solely
related to Ms Coutu's role as Remuneration Committee Chair and in
light of ISS's views on our shareholder engagement approach on
remuneration matters. In addition, no concerns were raised by any
shareholders during this most recent engagement exercise. The Board
remains highly supportive of Ms Coutu and the exceptional
contribution she has made to the Board, including from her
leadership of the Remuneration Committee and her continued
dedication to meaningful investor dialogue.
To address the key issues
highlighted above, the Company intends to provide greater detail in
the forthcoming 2024 Directors' Remuneration Report on both its
shareholder engagement activities, including the changes made to
the final 2023 Remuneration Policy proposals to reflect investor
feedback at the time, and more information on the relevant talent
markets and pay positioning for Pearson.
Pearson would like to thank all
those who have participated in engagement during 2023 and 2024. All
feedback received is invaluable to the Remuneration Committee.
Pearson is committed to having a constructive and positive
relationship with our shareholders and their advisors and will
continue to engage as appropriate going forward.