These findings were published today in the Investment Management Association’s (IMA) fourth report on adherence to the Financial Reporting Council’s (FRC) Stewardship Code (see notes to Editors) by asset managers, asset owners and service providers over the prior year.The majority of respondents were asset managers that collectively manage £708 billion of UK equities, representing 32 per cent of the UK equity market.
Liz Murrall, IMA Director of Corporate Governance, said:
“Engagement is a core part of the investment process in ensuring sustainable long-term results are delivered for end investors or clients. It’s encouraging that signatories to the FRC’s Stewardship Code are increasing and we’re also pleased that the response rate to our questionnaire is steadying. This means we are building a core group that will help to demonstrate how stewardship evolves over time.
“In addition, wider industry initiatives such as the launch of a new Investor Forum this summer and the merger of the ABI Investment Affairs Division with the IMA will all help to support the industry’s stewardship of its investee companies.”
Key findings from the report show:
• The number of signatories to the Stewardship Code increased to 274 in 2013 from 241 in 2012.
• The proportion of asset managers that report that stewardship is referred to in their clients’ mandates has risen to 83 per cent in 2013, from 71 per cent in 2012. In particular, for 44 per cent of asset managers, stewardship is referred to in all clients’ mandates, compared to 30 per cent in 2012.
• More respondents give advance notice when they intend to abstain or vote against a resolution (47 per cent in 2013, 35 per cent in 2012). Voting records are disclosed publicly by 66 per cent of respondents.
The report also outlines a number of detailed practical examples where respondents were asked how they engaged with certain companies:
Company
Main issues leading to engagement
Outcome
Afren
Remuneration
Company committed to ensuring concerns addressed next year
AngloAmerican
Leadership and strategy
Chief Executive replaced and strategy better understood
Barclays
Remuneration, culture, strategy and governance
Change in leadership and review of culture, but concerns remained over remuneration
Bumi
Conflict between co-founders
Co-founders split in 2014
Carnival
Health and safety, and governance
CEO/Chair split, but ongoing engagement on Environmental Social and Governance issues
First Group
Fees on rights issue, board succession and remuneration
New Chairman in 2014
Glencore Xstrata
Merger and resultant remuneration, and board composition
New Chairman in 2014
Lonmin
Strikes in South Africa and remuneration
Measures to improve human capital issues
Redrow
Proposed takeover
Takeover aborted
RSA Insurance Group
Strategy and cut in dividend
Still under consideration