Vicki Owen (VO): “How do you expect the issue of human capital management to come up this year as we get into peak proxy voting season?”

Katie Frame: “Probably in two main ways, the first one being around how we think about executive compensation and how the most senior people within the organisation are compensated, and how that might compare to the compensation structures and practices for the broader workforce.

“So what we’re looking at very carefully this year is ensuring that CEOs, other executives, aren’t receiving pay increases that are not consistent with the wider workforce. We wouldn’t want to see a CEO getting a pay increase that’s greater than the average for the workforce.

“If anything, we would like to see more restraint being applied and actually organisations thinking about should the CEO receive a lower pay increase, particularly relative to the lowest paid workers within the workforce, which are perhaps, as we talked about, most impacted by the current cost of living crisis.

“But again, it’s not just around the base pay. We also look at things like pensions, particularly in the UK. So what are the pension contributions that companies are offering?

“I guess the second key way that human capital is going to be coming up during AGM season is through shareholder resolutions. We set out a new framework for how we assess shareholder resolutions and so we’ll be applying that this year. It really comes down to what the resolution is asking for, but also what’s our engagement history with the company as well, because it might be that actually we think we can achieve more through the engagement dialogues that may be ongoing with the company, rather than necessarily supporting resolutions. So each one is looked at really on a case-by-case basis.”

VO: “And I imagine there’s a lot of client interest in this area as well driving this activity.”

Angus Bauer: “You would be hard pushed I think to find a fundamental investor that if he or she is invested in a company where they haven’t thought about the strength of the company, the quality of the management team, the reliability of delivery.

“And all of these things are rooted in human capital management, you see. So we have definitely some sort of cyclical issues that are driving the interest, the Great Resignation, we’ve got structural issues that are driving the interest in this subject, we’ve got clients, but fundamentally, there is an investment relevance to this that is driving investor appreciation and interrogation of this question.”

VO: “Great. Well, thank you very much. Well, it’s a lot to keep track of for you both and I look forward to following the developments in this area with you.”