Concealed votes knock "shareholder spring" off course

LONDON Tue Nov 20, 2012 12:41am GMT

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LONDON (Reuters) - Asset managers running trillions of pounds of pension fund cash are falling short with efforts to stamp out excessive boardroom pay.

Only months after the so-called shareholder spring promised a revolution in the way executives are paid, research by industry group FairPensions suggests many of Britain's largest investment houses are still sidestepping client requests to disclose and explain votes on controversial pay plans.

"People in the UK who are saving for a pension often have almost no way of accessing information on how their fund has voted on executive pay deals," said Catherine Howarth, chief executive of FairPensions.

"As our report shows, even when they take the trouble to ask their fund, the responses received are often inadequate and dismissive."

The FairPensions Your Say on Pay initiative encouraged pension investors and ISA savers to ask their providers to reject remuneration plans they considered to be unjustified against a backdrop of recession and lacklustre returns.

FairPensions was notified that only 26 responses were made by the 246 providers that received at least one email from clients, undermining the idea that this year's rebellions marked a watershed in transparent shareholder engagement.

Of those 26 responses, only 11 offered guidance and explanation of the fund manager's voting decision.

Only 11 providers disclosed their voting records and a paltry five offered direct links to web pages where savers could find more detail on these disclosures, the research showed.

The report raises questions about just how willingly fund managers have accepted enhanced stewardship responsibilities since the shareholder spring, which resulted in several CEOs, including Aviva's Andrew Moss and Trinity Mirror's Sly Bailey, being ousted after battles over pay.

Analysing the public voting of 20 of the UK's largest asset managers on this year's highest-profile confrontations, FairPensions found inconsistencies both within and between asset managers on unacceptable pay packages from one firm to the next.

While it agrees that plans should be considered case by case, FairPensions said that investors deserved clearer guidance on what did and did not constitute a satisfactory plan.

Illustrating the grounds for confusion, FairPensions challenged the logic of this year's approval of a maximum bonus award of 923 percent of base salary for BP CEO Bob Dudley when a proposal based on 500 percent for WPP CEO Martin Sorrell was rejected by almost 60 percent of the vote.

Only one of the 20 asset managers assessed in the report disclosed reasons for all significant votes, with a further eight giving reasons only for votes against management.

"If we are serious about tackling spiralling executive pay, we must empower savers to hold their pension and ISA funds to account," Howarth said.

(Editing by David Goodman)

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Comments (2)
DR9WX wrote:
Perhaps people ought to look after their own wealth. Why keep giving it to people who don’t know you on the promise that you might get more than you paid in or you might get less. Not a brilliant promise that is it?

You get what you deserve. Giving Asset Managers trillions of pounds is stupid. How can they be expected to invest all of it effectively? If they buy property in London, the price of property suddenly rises in London. Not helpful to people wanting to buy there. Once they start selling to pay out baby boomer pensions the property prices collapse. Not helpful to people who want to sell. (He would be a good source of insider information. This only fuels corruption.)

Please take responsibility for your own wealth. Invest in your self, your loved ones and your local community. This will improve your quality of life and your neighbours. Or you could whine that someone you have never met who earns millions of pounds a year doesn’t actually care if you live or die. If his actions cause you to lose your job, your home or you happiness he won’t be informed. What exactly are you expecting to happen? He is human as are you. He wants to grow his fund and his bonus. That is job satisfaction for him. His job isn’t to make you happy or explain his bonus scheme. Your job is to give him your wealth and shut up.

I have invested in these schemes and not done very well. The manipulation of interest rates downwards has cost me dearly. I hope you do better. I have invested in myself and spare currency is now invested wherever I see fit. I recommend you become financially literate, the best investment you will ever make. Do it soon.

Nov 20, 2012 10:08am GMT  --  Report as abuse
DR9WX wrote:
Ultimately who is the most capable of managing the funds of 30 million people?

1) 1 person
2) 30 million people

Seems obvious to me (second option) but why do so many people disagree?

Why are so many people happy to be financially illiterate?

Why was I happy to be financially illiterate until I was 43.5?

Why not just have one person on the planet controlling everything? We can call him The Emperor. Then we won’t have to bother with worrying about money, we can just do what we are told.

Is thinking for oneself really that difficult?

Nov 20, 2012 10:45am GMT  --  Report as abuse
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