December 5, 2018 / News

Trade group probes companies amid investor concerns

By Joe McGrath, ESG Clarity

An analysis of the UK's Public Register by the Investment Association, suggests that some companies are ignoring investor concerns

Trade group probes companies amid investor concerns

The trade association which represents UK fund managers has written to 32 companies in the FTSE All Share index asking whether they are adequately responding to investor concerns in key areas of corporate strategy.

In a media statement, the Investment Association said it has expressed concern that these companies have appeared on the Public Register for the same resolution in 2017 and 2018, suggesting that they had not adequately responded to investor views.

The Public Register tracks meetings of FTSE All-Share companies that have received significant shareholder opposition to proposed resolutions. Significant shareholder dissent is considered to be when more than 20% of votes are cast against the board.

“Appearing on the Public Register should act as a warning to companies that their shareholders are concerned about an aspect of the company’s governance,” the IA’s director of Stewardship and Corporate Governance, Andrew Ninian said.

“While many companies are taking the necessary action and engaging with their shareholders, a frustrating number are failing to address investor concerns.”

According to the Investment Association, there has been an increasing number of companies facing shareholder opposition, according to its analysis of the Public Register.

The trade body said that rebellions are up by just under a quarter in 2018, with 287 individual resolutions added to the Public Register so far in 2018, a jump of 22% from 2017.

“We expect these companies to provide an update statement to their shareholders on the engagement they had since the AGM vote, the views heard from shareholders and the follow-on actions taken,” Ninian said.

“We hope that the increased focus on these repeat offenders will encourage them to engage with their shareholders and ensure their concerns are being addressed. The risk if they do not is greater investor concern in the future.”