Minister slams UK pension managers on activism
UK – The UK’s trade and industry minister, Patricia Hewitt, has criticised the lack of shareholder activism among pension fund managers.
Speaking today at a stewardship and performance seminar in London, hosted by Hermes Pensions Management, she said: “Pension fund managers are not fulfilling their duty – as trustees – to take care of the assets that they own.”
According to Hewitt, shareholder voting levels at company’s annual general meetings only just passed 50%, compared to levels in the US of 80%.
Hewitt also called for more transparency on voting. “Beneficial investors need clear, concise and regular information on how fund managers are acting and voting on their behalf.
“Whether through voluntary codes or regulation, we need to create a chain of transparency and accountability that stretches from the boardroom to the individual shareholder and saver, via the pension fund manager, trustee and institutional investor.”
A further issue to be addressed in the realm of shareholder voting, brought to light by Unilever earlier this year, is that of the difficulties of the voting process. Paul Myners, who was today named new chairman of the Shareholder Voting Working Group, announced that a review of the impediments to casting proxy votes successfully at company meetings and the development of a programme of action to remove them would take place.
“As part of shareholders' and companies' commitment to clear and transparent communication it is vital that they can be confident that the process for voting translates shareholders' voting intentions into practice,” he said. The working group is aiming to propose solutions by the end of January 2004.
The focus on shareholder voting by Hewitt and Myners coincides with the publication of a study by the West Midlands Pension Fund into employment practices. It identifies those FTSE100 companies that are trying to sustain good employment practices and those that are performing less well.
The study has been welcomed by the Local Authority Pension Fund Forum. It has decided to carry out an engagement programme targeted at certain poorly performing companies with the aim if seeking improvements to protect and enhance shareholder value.