Investors urge Obama to install governance regime

By Joel Dimmock

LONDON (Reuters) - A global coalition of investors with assets of more than $1.3 trillion has urged United States President Barack Obama to establish a British-style corporate governance regime by the end of next year.

In a letter dated February 13, the group of 28 major investors call for a "comply or explain" system which adopts particular actions on remuneration, voting, and on the separation of roles at the head of companies.

Obama has already signaled tough action to rein in companies and earlier this month set a salary cap for top bosses at companies receiving taxpayer funds.

In their letter, made public on Thursday, the investors backed moves to allow formal objections at companies' annual meetings when there is a perceived misalignment of pay and performance.

"We see adoption of such an advisory shareholder vote as a critical first step toward addressing the executive compensation problems that permeate the United States market," they said.

Some U.S. firms -- including personal computer maker Hewlett-Packard Co and mobile phone maker Motorola -- have already installed a so-called 'say-on-pay' vote, or have said they will.

However, the measure is not compulsory and was rejected by firms such as Citigroup and Morgan Stanley. Exxon even lobbied shareholders to vote against the proposal.

The investors also urged Obama to support measures which would split the roles of CEO and chairman at U.S. firms. They said: "We see the absence of a strong, independent chair as a structural impediment to effective board oversight."