Tuesday, 5 July 2011

Looking back on the first half of 2011

A few snippets from the UK AGM season. We reckon that the average vote against a remuneration report is up a bit on last year, and so far we've had three reports defeated in 2011. Still, the large majority of remuneration reports are being passed with very little opposition (ie under 5%). More notable this season too is the attitude of some companies that 'a win is a win', even if they are registering a high level of opposition. It makes me even more sure that those asset managers who express reservations privately without backing it up with votes are a) making a mistake and b) depriving the market of valuable information.

Average vote against a director election is up a bit too, but the average is under 2%, so again there is a long tail of very low votes against. No wonder someone recently compared board elections to soviet elections. Most companies can be comfortable in the knowledge that they are extremely unlikely to face any serious opposition. And it's the same story on auditor appointments.

There is one area where opposition is rising - on those notice for meeting resolutions. I personally think this is ridiculous but you pays your money. Interestingly though the votes on these types of resolution do tell you a bit about which plcs have overseas ownership (assuming UK investors aren't dumb enough to just follow an adviser's house policy of routine opposition),

Finally, I was depressed to hear recently that some asset managers are using the 'bank bashing must end' line to justify not opposing resolutions at UK-listed banks. It's this kind of thing that makes you sceptical about legitimacy of the governance system.

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