02 September 2017
The world's biggest investors rebelled more at company meetings globally this year compared with last year, as asset managers came under mounting pressure to tackle businesses over high pay, board diversity and bad management.
Eighteen out of 20 large investors, including
Companies including GAM, the Swiss asset manager,
The rebellion by fund houses comes as regulators and politicians around the world increasingly scrutinise the relationship between companies and their shareholders. Fund houses have been criticised repeatedly for failing to hold companies to account on excessive executive pay, a lack of gender diversity and inaction on climate change.
"There are more questions being asked by more clients about how we vote. [AGM votes] are a client asset like any other and we as a fiduciary have a duty [to use them properly]. We don't look to have row with companies, but if there is something we disagree with, we have to reflect this in our votes," he said.
"The focus on stewardship is only going to increase. It is a fundamental way in which fund managers do the right thing by their clients and by the financial markets as a whole."
However, the Proxy Insight data shows that despite growing resistance from asset managers, many investors voted with management at least 90 per cent of the time.
"Some progress has been made, but asset managers are still failing to do a reasonably good job for shareholders like you and me. It is your and my money in our pension funds that have voted through [controversial measures such as] all these executive bonus pay packages that we all think are wrong," he said.
"Fund managers are not taking the job as stewards as seriously as they ought."
"It is the stewards who have the power [to hold companies to account at AGMs] and they have allowed these things to happen. The engagement process isn't working. Asset managers have been too short term for too long in their approach," he said.
Investors are expected to come under greater pressure to hold companies to account in the coming years. Last week, the
Jessica Ground, global head of stewardship at Schroders, said asset managers typically invest in companies and management teams they believe in.
"But that doesn't mean it is a blank cheque, and we will continue to hold them to account on pay and shareholder rights, which is a crucial aspect of the investment process," she said. Calstrs, the US public pension fund, and APG, the Dutch pension fund, were most likely to vote against company management, the data shows.
"As an active manager you can like a company, want to invest in it, and still have a real beef with its board and management," she added.
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