REG - Pearson PLC - Result of AGM - Update Statement

PearsonAnnouncement

30/10/2024 13:45

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RNS Number : 2746K  Pearson PLC  30 October 2024

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.

 

 

 

 

 

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