Tuesday, 29 November 2011
But when you back out the News Corp vote it gets very interesting. A few media outlets have got this badly wrong, including Pesto, and suggested that about a third of indie shareholders failed to back JM. Not so. You need to look at the actual number of shares voted.
The company says 1,105m shares vote for, 255m opposed, and 105m abstained. But, on a conservative reading, News Corp voted about 650m of those shares. Taking that out of the total means that the indie shareholder support for James is only about 55% I think.
That is a serious loss of confidence that the board will struggle to spin. If you're a shareholder and you think this company needs an independent chair now is the time to be pushing for it.
Monday, 28 November 2011
I suspect L&G's opposition will sting as it's a top 10 investor and has many UK pension fund clients who will be reading about their opposition in its Q1 reports to trustees. It can't be good news that large shareholders are public in their opposition to Murdoch either. Very difficult to change your mind once you're in the public domain saying a new chair is needed.
According to one report, Capital has voted for Murdoch but privately told the company it needs a new chair. I don't think that will be a one-off, so tomorrow's vote may not tell the whole story.
Also a certain hapless right-wing blogger has got himself called before the Leveson Inquiry for leaking Alastair Campbell's evidence. Incredibly the evidence is still available online. It is believed to say that Campbell received threatening phonecalls and texts "from the office of James Murdoch" when he supported The Guardian's 2009 story on the extent of phone hacking.
I'll blog asap tomorrow when the vote is out. Look out for possible large number of abstentions driven by ISS recommendation.
Friday, 25 November 2011
Separately Chris Bryant MP has written out to institutional shareholders urging them to oppose James Murdoch's re-election. Can't think of a previous example of this happening? Though maybe some MPs were involved in shareholder campaigns in the 1990s? (Cedric the Pig etc).
For what it's worth I expect Murdoch to be re-elected very easily, with opposition maybe as low as 10%. Enough shareholders seem to be willing to take the board's word that he's a good egg. But I also don't think this will be the end of the story...
Tuesday, 22 November 2011
it is worth noting that the pay structures in place at many companies today reflect previous attempts to hold executives to account (rather than, in most cases, to obfuscate, as the High Pay Commission rather uncharitably suggests). Executive pay is now set with reference to hugely complicated performance yardsticks because remuneration committees have sought to show they are sensitive to complaints about rewards for failure. So sensitive, in fact, that it is almost impossible to understand the pay formulas they put in place.
A better strategy [than employee reps] would be to strengthen the role of shareholders. At the moment, they have only an advisory vote, relating to decisions already made.
In the end, capping pay, or pay ratios, might be impossible politically, but it would be a much more direct way to tackle the problems identified by the High Pay Commission.
Monday, 21 November 2011
The blurb from this year's survey is below. The voting on bank remuneration reports is pretty depressing (especially Barclays!). Also interesting is the voting on James Murdoch at last year's BSkyB AGM - I am pretty sure there are some switchers this year...
Remuneration reports most likely issue to be opposed by institutional investors
Remuneration reports drew the greatest opposition from institutional investors yet bank remuneration reports were widely supported, according to the latest TUC fund manager voting survey published today (Tuesday).
The ninth annual fund manager fund voting survey, published to coincide with the TUC Pension Trustee Conference taking place in central London today, analyses the voting records of more than 20 fund managers, pension funds and voting agencies across 69 company resolutions between January and December 2010.
The survey has again found a sharp divide in voting stances, with four respondents supporting more than 70 per cent of resolutions, while five respondents supported less than a third.
Remuneration was the most common topic of engagement and the issue over which respondents were most likely to oppose company management. Half of the survey respondents supported less than half the remuneration reports on which votes were sought, and many supported less than a third.
The remuneration reports of all five major UK-listed banks were included in this year's survey. Surprisingly, bank remuneration reports comprised three of the five reports with the highest level of support in the survey. Barclays' remuneration report was backed by 75 per cent of all respondents - the highest in the survey.
These findings are surprising given the banks' recent stock market performance and dividend returns, says the TUC.
This year's survey showed further progress in the disclosure of voting records, with 13 respondents disclosing a full voting record, compared to just nine last year. However, the quality of information varied, with several fund managers only disclosing votes against and abstentions, and others only providing headline statistics.
This improvement in voting disclosure is good news for pension trustees and pension scheme members as it helps them to see how fund managers are using their shareholder mandate to influence companies, says the TUC.
Several respondents indentified changes made as a result of the introduction of the Stewardship Code a year ago, such as improved engagement record keeping. However, the Code has had very little effect on the voting stances taken by institutional investors and needs to be toughened up, says the TUC.
TUC General Secretary Brendan Barber said: 'Shareholders are supposed to be the ultimate check on our corporate system, but too many fund managers are still failing to use the power of their investments to influence corporate behaviour.
'The fact that UK bank remuneration reports received so much backing in the face of diminishing dividends and poor stock market performance is a clear sign that institutional investors are not doing their job properly.
'Reform of our corporate culture is long overdue and ministers need to take the lead in forcing through change, particularly on executive pay, where remuneration committees are frequently failing to act in a transparent and responsible manner.'
Sunday, 20 November 2011
There are three more interesting bits about the Bloomberg/Times report. First is the prediction that Capital are on side too. That is important as they are big holder, but I wonder what their clients will think. Second is the absence of other names. Are they struggling to find supporters? Third is the 20% figure (ie if 20% plus oppose he should go), which also popped up in a Telegraph column. I think this may be expectation management by the company, and if so it might be a useful benchmark.
A more objective comparison will be typical votes against directors. In the first half of 2011 the average oppose plus abtain was about 2.5%, of which 1.7% was the oppose. So a 20% oppose vote would be more than 10 times the average. And how many directors ever receive this kind of opposition? Less than 1%. Looking at a sample of just under 2,000 directors facing election at an AGM in the first half of this year, I can only see 9 that got 20% plus against, and two of those were directors at Eurasian! Add in the fact that News Corp holds 38%, and the board is setting the bar exceptionally low.
Friday, 18 November 2011
Of course, that doesn't mean much in itself, since asset managers don't just follow follow what their adviser says, and I have no doubt that a few of the usual suspects will continue to pull their punches. But there is undoubtedly some movement going on out there. Some asset managers will definitely take a tougher line this year than they have done for some time. There is also overseas investor interest in the chair's position.
I suspect asset managers may face questions from trustees about how they voted on James Murdoch, so support risks doing reputational damage. I still think he'll get through relatively easily, because I am cynical about mainstream asset managers, but this will store up trouble in the future.
I will be surprised if Murdoch doesn't get a slap of some form from the DCMS committee when it publishes its final report. The committee essentially seems to have come to the view that he is either incompetent or a liar. Taking the latter position would be very serious, but I suspect (currently) it's a minority view. But being criticised by parliament for incompetence is hardly something to stick on your CV & will surely add to pressure on him to stand down. I am kite-flying here, but it's a reasonable guess, I think, that James Murdoch can't come out of the committee's review within anything less than a further damaged reputation. If a dumbo like me can see this, so can an asset manager. So to give him the benefit of the doubt, and to vote for him, when you know this is a likely outcome seems rather irresponsible in my view.
Finally, note that the deckchairs are being shuffled, with Martin Gilbert apparently coming onto the board, and two others leaving. Gilbert would make a decent chair, and has done a good job at First Group, so maybe this is a medium-term plan? More surprising, when you think about it, is that the NEDs slotted to come off the board are not the News Corp reps. If two come off and Glibert plus one other join there is no change in the level of independent representation. Crispin Odey publicly said that the board needs more independence, though oddly not an independent chair, so why isn't he making more noise?
UPDATE: Actually I have been a doofus, one NED coming off is a News Corp rep.
Wednesday, 16 November 2011
ABI - Amber top, with role of chair flagged up
LAPFF - oppose James Murdoch's re-election, support SID's re-election
PIRC - oppose James Murdoch's re-election, plus other News Corp cross directors
Glass Lewis - oppose James Murdoch's re-election (? if Grauniad is right)
That means if ISS oppose or abstain on James Murdoch he will have failed to win the support of any shareholder advisory group. Not good for a FTSE100 chair.
Sunday, 13 November 2011
Saturday, 12 November 2011
The Global Unions Committee on Workers’ Capital (CWC) announces the publication of its report: Proxy Review 2011. The report encourages investors to take an active role in proxy voting oversight.
Proxy Review identifies trend-setting shareholder votes on social, environmental and corporate governance issues that are relevant for pension investors with global equity portfolios. The report includes key votes from: Australia, Canada, Spain, Switzerland, the United Kingdom and United States of America.
Shareholder voting is one of the primary means by which investors can influence a company’s operations. It is therefore important for shareholders to participate in the voting process. However, pension equity investments can span hundreds of companies and numerous countries. Add to this complexity, regulatory differences, conflict of interest problems, agency dilemmas and narrow interpretations of fiduciary duty, which all contribute to accountability gaps along the investment chains of pension funds. Recognizing these gaps, Proxy Review was created to serve as an accessible resource for pension trustees who would like to evaluate how key proxy votes in international portfolios were cast on their behalf.
Ken Georgetti, Chair of the CWC and President of the Canadian Labour Congress said, “At the height of the global financial crisis, institutional investors were accused of failing to actively oversee corporate governance and risk management practices at the companies they own. This report will help the pension fund trustees who invest workers’ retirement savings overcome barriers in exercising such oversight. As our Proxy Review project demonstrates, creating the opportunity for dialogue between trustees and their investment managers is one important way the Committee on Workers’ Capital is tackling serious accountability deficits within global investment chains.”
The selected key votes in Proxy Review 2011 focus on corporate governance issues, though environmental and social issues are also highlighted. Among the issues addressed are the independence of Board members, CEO succession planning, executive remuneration and compensation, pay-ratio disclosure, sustainability reporting and disclosure of policies on labour and human rights standards.
These votes were cast at major global companies that represent a wide range of industry sectors. Companies include: Rio Tinto, Barrick Gold, Banco Santander, Nestlé, Credit Suisse, Novartis, UBS, BP, Hewlett Packard, Apple, Chevron, Shell, JP Morgan Chase and Bank of America.
Wednesday, 9 November 2011
Finally, on executive pay, it is worth reminding the House that the average chief executive of a FTSE 100 company earned 47 times the amount earned by the average employee in 1998 and 115 times that amount in 2009, so the gap actually widened under the last Labour Government. I agree with the hon. Lady that there is an unsustainable disconnect between how our largest listed companies perform and the rewards that are on offer. Concern on that comes not just from Government, but from investors, business groups and others. We are considering ways to reform remuneration committees and to empower shareholders, for example by making shareholder votes on pay binding and ensuring that there is shareholder representation on nomination boards. We are consulting on a number of issues, but at the end of the day, it is up to shareholders rather than the Government to determine executive pay.