“Without a critical mass of engaged investors, boards are not held to account, and the call for regulators to take more direct action is hard to resist - with all the implications that has for a loss of flexibility in the way companies are run.
“If shareholders do not lift their eyes and see that as a result of such views stewardship is weakening and needs to be strengthened, then Governments will conclude that governance must become based on law – and that is not good news for shareholders investing in companies that need flexibility to win in global markets – and the public will conclude that shareholders do not deserve their rights.
“So to those who have shareholder rights, I say use them or lose them. And to those who can get engaged, I say now is the time to start”.
I obviously agree, as I've been banging this particular drum for some time:
in public policy generally in this area, a return to pre-crisis behaviour by institutional shareholders could do a lot of damage. As I've banged on regularly in the past, if the owners - for whatever reason - repeatedly show no inclination to act like economic theory would suggest they ought, then people will question a shareholder-focused governance regime. If companies and their investors wish to avoid a situation where there is a greater statutory element to governance they need to recognise this.