Wednesday, 14 March 2018

Duplicate Stewardship Code statements

A month or so back, I blogged that I had found several hedge funds using similar blurb in their Stewardship Code statements. This was off the back of digging into Carillion a bit. Then, when I looked a bit deeper at the GKN / Melrose bid, I found more of the same.

So I went and had a proper trawl, and in the end found 34 examples of managers using versions of the same text. So we added this list to our submission to the FRC's consultation on the UK Corporate Governance Code and Stewardship Code, which is here. I now know there are more out there.

We've picked up a bit of media interest off the back of this, which is welcome. Hopefully we can use this to develop some ideas about what needs changing under the next Labour government.

As a starter, I would question why any firm that can have a significant impact on the future of an investee firm should be allowed to get away with not saying anything meaningful. The Code itself might be tightened to capture issues such as: how managers approach stewardship where they have both long and short positions in the same company (on the long side they'll want to address causes of any underperformance, but not on the short side), managers shorting their own clients, approach to M&A issues and political donations.

But that's for another day....

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