Investment Association shareholder rebellion register

The Investment Association (IA), which represents the UK’s asset management industry, has launched its public register of listed companies which have had significant shareholder rebellions. The IA proposed its development in its response to the government’s green paper on corporate governance in 2016 and was asked to go ahead with the launch of the government’s feedback this year.

The register includes FTSE All-Share companies which have received votes of 20% or more against any resolution or withdrew a resolution prior to their Annual General Meeting (AGM) in 2017. The IA said by publishing this information for the first time in one central location, the register aims to increase transparency, accountability and scrutiny of listed companies by shareholders, media and the wider public.

Investment Association shareholder rebellion register
UK’s Investment Association launches register of shareholder rebellions

The IA added that a key purpose of the register is to focus attention on how these companies respond to the concerns of their investors. It will highlight the public statements made by the companies on the register, on how they have addressed shareholders’ concerns. Almost one third (31%) of companies named on the register have provided a public response explaining how they are addressing their shareholders’ concerns.

Analysis of the data published by the IA revealed that from the AGMs and General Meetings (GM) held in 2017 by more than 640 FTSE All-Share companies, over one in five (22%) companies listed on the FTSE All Share feature on the register, due to having at least one resolution that received over 20% dissent or was withdrawn.

Research also showed that pay-related issues top the list of shareholder concerns, with almost four out of ten (38%) resolutions listed on the register being due to high votes against pay-related resolutions, such as shareholders voting against companies’ annual remuneration reports, remuneration policy or other remuneration related resolutions. The second most frequent resolutions were the re-election of company directors with one in three (32%) of resolutions listed on the register, due to a high vote against the re-election of a company director in 2017.

Chris Cummings, chief executive of the Investment Association, said: “The data gathered for the Public Register reveals the true scale of investor concern and shows shareholders flexing their muscles by exercising their votes. With over one fifth of the FTSE All-Share having faced large shareholder opposition in 2017, a significant number of companies need to seriously start listening to shareholder views and acting on them. Bringing all this information into one place and giving companies the chance to explain how they are responding to the high vote against, will be invaluable in helping our members put savers’ money to work in the UK’s best run companies.

However, remuneration specialist Cliff Weight board member at the UK Individual Shareholders Society (ShareSoc) and Manifest non-executive director, expressed some scepticism that the asset management’s industry organisation was the right body to be in charge of the register.

Writing on the ShareSoc blog Weight said: “I worry about the conflicts of interest that the Investment Association is riddled with. These will lead it not to pursue the problems in a sufficiently robust manner. They will be lenient and superficial in their approach. Why would they seek to deal with the root cause of problems when they themselves are part of the problem?”

Last Updated: 21 December 2017
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