The report, which compares the voting records and levels of transparency on voting of Asset Managers, checked under the bonnet of firms responsible for investing £13.8 trillion of assets for pension savers, charities, universities and individuals all over the world.
ShareAction identified votes at the Annual General Meetings of major companies in 2014 where there was more than 30% dissent from shareholders and looked at who voted how on these controversial votes. Most covered executive pay and re-electing board members. ShareAction also examined four shareholder resolutions on environmental and social issues.
This is ShareAction’s first survey to focus in detail on the asset management industry’s voting policies and practices. All of the managers surveyed have signed up to the UK Stewardship Code, first published in 2010 in the wake of the financial crisis, which recommends that asset managers do publicly disclose their voting records. 31 of 33 have also signed the Principles for Responsible Investment.
ShareAction finds a disconnect between what some asset managers’ voting policies say they will do, and how they actually voted in 2014.
To challenge the bad performers, ShareAction’s report also provides questions for Asset Owners to ask each of the Asset Managers surveyed.
Sectors affected by the controversial votes included pharmaceuticals, energy, fashion, tourism, defence, consumer goods, transport, and financial services. Investee companies included AstraZeneca, BG Group, Burberry, Carnival, Reckitt Benckiser, and Standard Chartered.
The asset managers with a strong track record of voting against recommendations by corporate management on controversial votes in ShareAction’s survey were as follows: Threadneedle Asset Management, AB (Alliance Bernstein), Aviva Investors, and Goldman Sachs Asset Management.
On Shareholder resolutions about environmental and social issues, the following Asset Managers voted most often for such resolutions: Aviva Investors, Threadneedle Asset Management, and Royal London Asset Management.
The five most transparent Asset Managers on disclosure are: Aviva Investors, F&C Investments, Newton Investment Management, Royal London Asset Management and Standard Life Investments.
Meanwhile, the asset managers who most consistently support corporate management even on the most controversial votes were as follows: Aberdeen Asset Management, BlackRock, HSBC Global Asset Managemnt, Schroders Investment Management, Hermes Investment Management, and M&G Investment Management.
On Shareholder resolutions about environmental and social issues, the following Asset Managers voted most often against such resolutions: Aberdeen Asset Management, Investect Asset Management, JP Morgan Asset Management, and UBS Global Asset Management.
Six Asset Managers do not disclose their votes as a matter of practice: Artemis, Capital International, Invesco Perpetual, J O Hambro Capital Management, Santander, and Wellington. The Stewardship Code, to which all are signatories, recommends that asset managers should routinely disclose how they voted.
ShareAction Chief Executive Catherine Howarth says:
“Most of us investing with big-name Asset Managers trust them to vote sensibly on a host of controversial issues at the Annual General Meetings of the companies we own. But our survey suggests a wide range of big names in asset management aren’t exercising their stewardship responsibilities at some of the world’s biggest companies. While the detail of any one vote may not be indicative of an approach, there does seem to be a pattern for some managers across the votes we looked at with significant shareholder dissent. We expect investors will be asking tough questions of their Asset Managers, particularly those who appear to be simply backing management most of the time, based on this report. Investors should on the whole support company management. However, they should be willing to vote against management’s voting recommendations to protect the long-term interests of their clients and their beneficiaries.”
Report author Jo Mountford says:
“Asset managers’ voting decisions have a strong impact on companies’ activities, so it is important that investors understand how these decisions are made. Transparency of voting records and rationales for votes is crucial for ensuring that asset managers are held to account for their decisions, and will help to drive careful consideration of these decisions in the industry.”
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