Some asset managers go too easy on companies at AGMs: activist group

Mon May 18, 2015 7:22am EDT
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By Simon Jessop and Sinead Cruise

LONDON (Reuters) - Some asset managers sided with company managements too often in contentious votes at annual general meetings last year, according to campaign group ShareAction which suggested they were not fulfilling stewardship responsibilities to clients.

But the fund firms defended their positions, saying that - unlike many investors - they engaged with companies throughout the year to ensure boards were held to account.

Since the financial crisis, politicians and regulators have sought to encourage asset managers to be better stewards of the shares they manage on behalf of clients, to ensure companies are well run and maximize returns for investors.

While the number of votes needed to vote down a company resolution can vary, the actions of the asset managers is crucial as they often hold quite large blocks of votes.

ShareAction, a shareholder activist group, compared the records of Britain's 33 largest fund firms - which manage 13.8 trillion pounds in assets - in a series of "controversial" votes, defined as resolutions put forward by UK companies that attracted more than 30 percent of dissent among investors.

Nine votes saw that level of opposition in 2014, and ShareAction chose the eight that related to pay or board composition.

It found a wide spread of votes among the asset managers.

But it highlighted that six asset managers, including M&G (PRU.L: Quote), Hermes Investment Management and Aberdeen Asset Management, were found to have backed company managements in most of the votes, "despite apparent problems with the proposed resolution".   Continued...