More excerpts from my recent journeys in spreadsheets. First up, if you pull out the largest 100 votes against management in 2010 in the FTSE100, guess what category of resolution appears most often. Most people, understandably, go for remuneration reports, though you might think director elections are a safer bet since there are lot more of them (only one rem report per company remember).
Actually it's neither. Resolutions relating to share issues were the largest group last year and there were some chunky votes against (ie 20% plus). The interesting thing is that when you cross reference this with publicly disclosed voting, based on the limited sample available (the IMA stats on the extent of disclosure give a misleading impression of what you can actually get out there), it appears that UK institutions weren't leading it. Only a couple of houses seem to take a consistent position on these resolutions and they aren't big enough IMO to account for the votes. On the other hand numerous big houses did not oppose management where big oppose votes were recorded.
Add to this another oddity from last season - a string of large votes against resolutions seeking to change the notice for meetings. I remember seeing a few of these last year and being puzzled by them and there's a reasonable representation of them in the top 100 votes. But so far I haven't found a single institution that discloses which voted against ANY of the resolutions that recorded big votes against. Whilst on average these weren't particualrly big votes against, by comparison they were generally bigger that votes against auditor appointments. My suspicion is that this is an example of US investors following a recommendation from one of the big proxy advisers. If anyone has any better ideas I am all ears.
The other odd thing I found came out of looking at average largest holders. This was a pretty basic bit of analysis based on notifiable holders. What I found was that the average size of the largest holder in the FTSE100 increased substantially from 2006 to 2010. Like other people I have mentioned this to I thought maybe the average is pulled up by some very big investors at the top end (think extractives with controlling shareholders, bank recapitalisations etc). That has had an impact, but it's not the whole story by any means.
I also looked at the proportion of the FTSE100 where the largest shareholder held less than 5%. It halves over the 5 years. Finally I looked at the number of notifiable holders. The number of companies where it is four or less again drops considerably form 2006 to 2010. This is exactly the opposite of what I was expecting to find given the conventional wisdom that the ownership of UK PLC is becoming atomised. I really want to get into more detail with this one as I still can't quite believe it. But what I have seen so far does not bear out the argument that shareholder engagement isn't effective because of diversified ownership.
2 comments:
Glass Lewis routinely recommends (or at least did in previous years) an against vote on EGM 14 day notice periods apparently.
A lot of these votes may be explained by overseas institutions voting only in line with proxy advisors (the same complaint we hear from companies in overseas markets about their overseas investors!).
Having said that we noted a trend where South African investors were routinely opposing share issue authorities at many UK meetings due to exchange controls. This explains quite a few of the big share issue dissenting votes.
It's the wrong time of year for me to have time to dive into our voting and guideline records, but the further you dive into the data the more trends you can find.
cheers Alan - very interesting, particularly the SA point. I think Investec saw the biggest oppose votes on share issues last year?
On the notice of meeatings yeah I think it's GL too.
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