Forty percent of FTSE 350 companies believe proxy advisory firms have a ‘negative’ or ‘very negative’ influence on relationships between shareholders and companies, according to a survey by the Financial Times and ICSA Boardroom Bellwether.
The survey, the third annual such study by the FT and the UK’s Institute of Chartered Secretaries and Administrators (ICSA), shows 32 percent of companies surveyed believe proxy advisers have a ‘negative’ impact and 8 percent see a ‘very negative’ impact. But 42 percent rate the impact of proxy advisers as neutral and 17 percent see it as positive.
On the issue of reporting, 28 percent of those surveyed say they are ‘very’ much in favor of dropping quarterly reporting while 25 percent have a ‘positive reaction’ to the idea. Almost a third (32 percent) of respondents are neutral on the issue while 8 percent say they are ‘not particularly’ in favor.
The opinions reflect ‘the emphasis in the Kay Review on policy initiatives to encourage and support long-term thinking,’ say the study’s authors. ‘Some companies, most notably Unilever, have already taken steps to challenge the quarterly reporting convention.’
The survey follows recommendations by the Kay review to combat ‘short-termism’ among companies and investors, and a revision of the European Union’s (EU) Transparency Directive early last month that would allow publicly listed companies in the EU to drop quarterly reports. The EU directive also aims at encouraging a longer-term outlook.
When asked ‘to what extent do you think your board considers its members to be diverse in terms of gender?’, 13 percent of respondents say it is ‘not at all diverse’ and 34 percent say it is ‘not very diverse.’ Just over a fifth (21 percent) say their board is ‘somewhat diverse’ while another 21 percent say is ‘diverse’ and 11 percent say ‘very diverse.’
More than half (53 percent) of respondents also say their ‘female executive pipeline’ will be ‘not very sufficient in providing a sustainable pool of talented, board-ready women.’ Twenty-one percent say their pipeline is ‘sufficient’ while 19 percent say it is ‘not sufficient’ and 4 percent said it is ‘nearly sufficient’. No respondents say the pool is ‘entirely sufficient’.
‘Companies also now appear less confident their female executive pipeline will provide a sustainable pool of talented, board-ready women, with results slightly lower than in 2012,’ the study authors say. ‘This points to an emerging policy dilemma for the government in terms of the further action it may consider necessary to deliver the diversity agenda.’
