AGM Season Offers Evidence of Good Stewardship

The voting pattern at recent AGMs offers strong evidence that effective stewardship is alive and well in the City of London. This is the conclusion of the Investor Relations Society’s IR Forum, a regular gathering of governance experts from institutional investors and senior investor relations officers representing a cross-section of the UK's listed businesses.

For immediate release

London, October 9, 2014

AGM Season Offers Evidence of Good Stewardship

At the recent meeting in October, the IR Forum reviewed evidence compiled by Makinson Cowell, the London-based IR advisory business, of the voting patterns at this season's AGMs. The Forum compared current and previous years and looked for changes that highlight how the debate around governance, remuneration and performance has changed, and possibly strengthened.

The Forum is encouraged by an increased level of overall participation – this is a healthy sign of strengthening shareholder engagement. There is no clear overall trend in voting patterns on particular resolutions, but analysis indicates a range of views being held by different institutions and companies on different issues: in the judgement of the Forum, this is a reflection of the effective operation of the ‘comply or explain’ approach underpinning the governance of UK companies. Proactive engagement will help companies adapt future proposals appropriately to their particular circumstances.

"Companies need to expect higher votes against many resolutions, particularly where there is any scope for ambiguity and engagement has been limited." commented Trelawny Williams of Fidelity Worldwide Investment, a regular attendee at the Forum. "Institutions can have strongly held standards and companies can have logical reasons for non-compliance. Votes of 25-30% against management and abstentions may become more common but in many situations this should be regarded as a signal that things need to change in the future rather than reflect an immediate crisis."

Andrew Ninian, Director, Corporate Governance and Engagement at the Investment Management Association, who are members of the IR Forum, also commented: “It is clear to us that where there has been effective engagement companies can achieve high levels of support. Companies need to listen and adapt before ideas become too firmly held and, where appropriate, investors need to recognise management’s willingness to find sustainable solutions.”

John Dawson, until recently Chairman of the IR Society, who chaired the recent IR Forum, added: "Good stewardship is not easy. It can be very difficult for Boards to accept negative votes of any kind but if the discussions are to be constructive and the wide range of investor views are to be understood, then we will need to understand what lies beneath. All parties need to be proactive as potential issues emerge, even at an early stage. It is these early discussions that will fuel good stewardship and avoid high votes against in the future.”

For further information please contact:

The Investor Relations Society
John Gollifer, General Manager 020 7379 1763
Laura Hayter, Head of Policy and Communications

Notes for editors:

The Investor Relations Society
The Investor Relations Society (IR Society) is a membership organisation that exists to promote best practice investor relations in the UK and beyond. It is run by IR professionals for IR professionals.

Established in 1980, the IR Society’s mission is to promote best practice in investor relations; to support the professional development of its members; to represent their views to regulatory bodies, the investment community and government; and to act as a forum for issuers and the investment community.

The Society has approximately 700 members from the UK, Europe and beyond, including representatives from most of the FTSE 100, a large number of FTSE 250 companies and a number of AIM and smaller companies as well as IR advisors and service providers. For more information visit www.irs.org.uk or connect with us on Twitter (@IRSocietyUK) or LinkedIn.

Published 9 October, 2014