Next AGM rocked by low pay vote
Nearly one in three fail to back the board over Living Wage position
ShareAction and the investors that backed its Living Wage shareholder resolution at Next Plc scored an unequivocally great result yesterday. A 27% vote in favour with abstentions taking the total that didn’t follow the board’s advice to oppose to over 29%.
A hat-tip to investors including Axa Investment Managers, Epworth Investment Management, Friends Provident Foundation, Greater Manchester Pension Fund, Scottish Widows and Trust for London who co-filed, and to the Church of England for pre-declaring. Going into bat on this topic in an environment where some investors have lost their bottle and where business is very vocal about rising costs requires some grit. They should feel vindicated by the result.
My personal take on this is - get in! I know from experience that it’s tough to get shareholders behind resolutions on social topics in the UK. I think this must be the best result for a decade and one of the best ever. Most importantly, the vote for the resolution, and thus against management, was over 20% meaning there are two knock-on results. First, it requires a response from the company in line with the UK Corporate Governance Code:
When 20 per cent or more of votes have been cast against the board recommendation for a resolution, the company should explain, when announcing voting results, what actions it intends to take to consult shareholders in order to understand the reasons behind the result. An update on the views received from shareholders and actions taken should be published no later than six months after the shareholder meeting. The board should then provide a final summary in the annual report and, if applicable, in the explanatory notes to resolutions at the next shareholder meeting, on what impact the feedback has had on the decisions the board has taken and any actions or resolutions now proposed.
Next has already responded as follows:
Although the Board does not agree with the form of the resolution, it recognises the value of providing more clarity on how wages are determined and managed at NEXT. The Company has a long-standing commitment to transparency and aims to offer shareholders meaningful insight into its decision making. Accordingly, we welcome the suggestion and will expand our disclosure on wage-setting principles and practices in our next Annual Report.
In line with the UK Corporate Governance Code, we will continue to consult with shareholders who voted for the resolution, and an update on shareholder views and any actions taken will be published via Stock Exchange Announcement by 15 November 2025, with a final summary in the 2026 Annual Report and Accounts.
It is important that shareholders who supported this resolution because they want Next to properly evaluate the Living Wage make that clear during this consultation, as the company may not have the incentive to hear this.
The second result of the vote being over 20% is that it should go onto the Investment Association’s public register. I know some investors use significant votes against management as a factor in analysis and engagement.
Another encouraging aspect of the vote is the support it received from major asset owners. I wrote previously about CalPERS and CalSTRS and it’s important to note these are the 1st and 2nd largest pension funds in the US. Similarly co-filer Greater Manchester Pension Fund in the UK is the largest LGPS fund in England and Wales. Looking at voting disclosures Nordea also voted for.
On the flipside I can see a couple of surprises - both Norges Bank Investment Management and APG in the Netherlands opposed the resolution.
NBIM:
APG:
Perhaps wrongly I would have expected both of these to be supportive. It will be interesting to see if they take a different approach on the other two resolutions.
A quick word too on proxy advisors. I understand that the benchmark recommendation from ISS was Oppose whereas for Glass Lewis it was For. (Also a quick shoutout to my old shop PIRC which also recommended For.) I am firmly in the camp that voting decisions sit with investors and in practice big players use the research proxy advisors provide to reach their own conclusions. But I think we should also be aware of the likely anchoring effect. And ultimately you pays your money you takes your choice.
Clearly, as things stand, asset managers determine the outcome of these votes so inevitably attention is going to turn to how they have voted. A lot of managers have a delay in disclosure so it won’t be possible to get a full picture yet. Hopefully some analysis of this will be possible before the other votes at M&S and JD Sports. If anyone wants to get in touch with their house’s voting decision I might do an update piece.
In the meantime there is a general point here worth considering: there is a subset of asset managers that oppose resolutions such as that at Next addressing low pay for workers and vote (and sometimes lobby) for increased reward for executives. Asset owners that delegate voting to their managers need to be aware that some managers are trying to lean against economic inequality whilst others are comfortable with it, and arguably contributing to its increase.
It is obviously up to asset owners to determine what their own approach is to these issues. In doing so it might be nice to find out what their beneficiaries think. After all, they don’t want to be bracketed with the out of touch elite that takes decisions that are wildly out of line with public opinion…
A new poll commissioned by responsible investment NGO ShareAction can reveal that 7 in 10 people surveyed believe it is not acceptable for CEO pay to be over 100 times that of their lowest paid employees. This comes as a resolution on low pay co-filed by investors at retail giant Next will go to a vote today at the company’s annual general meeting (AGM).
Last year, the CEO of Next was paid £4.72 million, which made for a ratio of 219 to 1 when compared with its lowest paid workers and recorded pre-tax profits of just over £1 billion this financial year. Despite this, the company has stated cost implications prevent it from meeting the demands of the resolution, which calls for greater transparency on the extent and effects of low pay on the company.
In addition, the poll conducted by Survation also uncovered that 93% of Next shoppers think it is important for employers to pay their staff the real Living Wage rather than the legal minimum and almost a third of Next customers surveyed said they would stop shopping at the retailer if they knew it did not pay all its staff the real Living Wage.
Looking ahead, we now have about six weeks to the votes at M&S and JD Sports. I hope investors who were on the fence (if not on the wrong side of it) this time have a look at the vote at Next and take it as a sign that there is a serious groundswell of support for decent pay in the retail sector. There’s still time to get onboard.