Wednesday, 3 June 2009

Tomkins vote points to clueless shareholder activism

A quick trip into shareholder voting geekery. Have a look at the vote on the remuneration report at Tomkins' AGM this week. Results here. The abstentions are almost as big as the votes in favour. On straight votes for and against, the remuneration report vote passed with 61% in favour. But add together abstains and oppose votes, and the company only got active support from 38% of its shareholder base.

That large number of abstains probably results from some investors blindly following voting advice and/or fund managers herding in voting as they do in other investment decisions. This is now the second company this season - the first was Amec - which has passed its remuneration report on minority support.

Personally - though I'm in a minority at work I know (this is a personal blog remember!) - I've never really seen the point of abstaining on the remuneration report, given that it's an advisory vote in any case. In practice it leads to 'splitting the difference' when companies make some concessions (ie moving from an oppose to an abstain). But if the company does enough, why not vote in favour?

We now have the ridiculous situation of two large companies passing remuneration reports on minority support. Yet the companies in question can quite legitimately argue that they won a majority of votes cast.


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