Proxy voting advisers and anchoring

Last year I blogged about an odd result on the remuneration report at the Invensys AGM. Whilst it passed, with a not to be ignored almost 20% vote against, actually the turnout on that resolution was waaay down. The company didn't disclose abstentions, so on the face of it looks like that - just for that resolution - a large chunk of the shareholders didn't turn up.

Well, when you look at publicly disclosed voting data you find that a number of asset managers did indeed abstain. What's more amongst those that abstained are those that seem to vote rather similarly in general. Therefore I suspect this result could be an indication of the influence of A Large Proxy Voting Adviser. If you think about it, isn't it a bit odd that a company with a diversified shareholder base ends ups with a massive block of abstentions? That would mean different investing institutions controlling maybe 40% of the shares voted individually reaching the conclusion that neither a vote for or against was warranted. That's possible, but it seems more likely to me that it's just people following their voting adviser.

There are two interesting things to note about this. First, if I am right and this is the influence of A Large Proxy Voting Adviser doesn't it illustrate how the likelihood of a major upset for a company can turn on a single decision? Again assuming my theory is broadly right this suggests that if the recommendation had been to oppose the remuneration report then Invensys may well have have lost by about 3:2- and it would be a FTSE100 pay defeat (of which there were none in 2010). But as it was the company won the for/against vote by 4:1 and reported only that result.

Secondly, I am happy to accept that in practice many asset managers are a little above just blindly following their adviser's recommendations, and tailor their stance a bit. But I think there must be an anchoring effect - the more (or less) your adviser recommends voting against the more or less likely you are to do so. So if there is a significant difference between advisers' recommendations you would expect to see a difference in manager voting outcomes depending which adviser they use. This may sound a bit obvious, but it is important since it clearly has an effect at company meetings.

And once again, it doesn't look a lot like ownership does it?