Asset managers will follow a corporate board’s lead in 90 percent of votes, finds a new study, as most fund houses are found to back issuers on matters such as executive pay nine times out of ten.
New figures from Proxy Insight find that many of the world’s largest investment management firms, including Vanguard, BlackRock and Goldman Sachs Asset Management, matched management votes at general meetings in 90 percent of cases during the 2014/15 proxy season.
The study examined 40 institutional investors, and found that only a handful voted for management proposals in less than 80 percent of cases. Among them are Aviva Investors, PGGM Investments and California pension fund CalSTRS, which disagreed with management the most often, supporting only 57 percent of votes.
This statistic has raised questions about whether the world’s largest fund houses are acting in the best interests of their own clients. Speaking to the Financial Times, Eric Chalker, policy director at the UK Shareholder’s Association, says that it does not appear that asset managers are holding boards accountable ‘in the interest of those whose assets they are managing’.
‘It has always been a puzzle why so many AGM resolutions receive near-unanimous support, even when there are obvious reasons for directors’ wishes to be challenged,’ Chalker adds.
Nick Dawson, managing director at Proxy Insight, says that beyond these headline figures, there is evidence that asset managers will still disagree with issuers on some crucial topics.
‘While the average level of support across all management resolutions is quite high, when contentious topics such as remuneration and auditor ratification are considered in isolation the numbers are much more aggressive,’ he explains.
Such agreement between investor and issuer may also be rooted in outreach efforts made by IR departments. Dawson adds that feedback from the survey suggests that this is improving.
‘Governance teams at major investors say they are seeing better communication from many IR teams who make an effort to understand each investors’ voting policies and communicate with the governance teams who make the voting decisions,’ he notes. ‘Indeed, some over-communicate.’
‘By contrast, many companies don’t communicate at all perhaps believing that all they need to do is speak to the portfolio managers, which for most investors is just not enough anymore.’
