Monday, 29 June 2009

Institutional investors firing blanks says TUC

The annual TUC Fund Manager Voting Survey is published today, full version is here (PDF). It confirms a lot of what you probably expect - actually institutional investors as a whole didn't put much pressure on the banks on either pay or strategy in the run-up to the crisis, at least judged by how they used their voting rights.
The TUC's 2008 fund manager voting survey analyses the voting records of 20 fund managers and pensions funds between July 2007 and July 2008, including votes on banks' remuneration reports and the RBS acquisition of ABN Amro.

The survey shows that investors did not signal any great concern about remuneration reports at bank AGMs. HSBC was the only bank to receive less than 60 per cent for its remuneration report from the survey respondents. The report received just under 82 per cent support at its 2008 AGM.

The survey also shows that out of the respondents only one investor - Co-operative Insurance Society - opposed the acquisition of ABN Amro by RBS in 2007, which is now widely regarded as one of the worst deals in UK corporate history, despite receiving overwhelming support from RBS shareholders as a whole.

The survey reveals big differences between institutional investors in their general approach to boardroom pay. At one end of the scale six respondents supported every remuneration report covered in the survey while six of the respondents supported fewer than half.

A similar gap emerged in investor stances on incentive schemes. Eight respondents supported all incentive schemes in the survey and a further eight opposed the majority of schemes. Most of the respondents took the same position on both remuneration and incentive schemes, suggesting that they have a clearly defined stance on these issues.

It clearly points up the fact that there are differences between asset managers in terms of how pro-management they are. This point is obvious to anyone who spends any time looking at voting data, but many trustees still think that delegating voting to managers doesn't really matter. All I can say is that in that case don't be surprised if you find your pension fund has voted for somethings you don't like, and against some union-friendly initiatives.

Separately the NAPF has published a survey suggesting that pension funds are starting to put a bit of effort into activism. Quick blurb below, more on the NAPF website.
Key findings from the National Association of Pension Funds 2009 engagement survey show that nearly half (49%) of pension schemes will spend more time scrutinising the actions of their fund managers on engagement issues as a result of the economic crisis. Over three quarters of funds (78%) said they will give more time to reviewing reporting and 57% said they will pay more attention to votes cast.