NAPF’s Scott queries some Hermes activism
BELGIUM - Derek Scott, chairman of the UK’s National Association of Pension Funds’ shareholder affairs committee, has queried some of Hermes Pensions Management’s shareholder activism strategy - citing Vodafone as an example.
Scott - who is also a member of the trustee board of the Railways Pension Fund Pension Scheme, mentioned Hermes, which is owned by the BT Pension Scheme, as an example of shareholder activism at a conference on corporate governance in Brussels.
He said Hermes’ approach had been so far successful – but added: “Hermes sometimes takes on challenges that are a bit big.”
Referring to phone firm Vodafone, he said: “I am not convinced Hermes’s approach is going to work in that situation.” It was not immediately clear what specific situation Scott was referring to.
Vodafone declined to comment. It is holding an ‘analyst and investor day’ meeting on September 27.
Scott – who is also chairman of the trustees of Stagecoach Group scheme - told delegates he did not think that disclosing directors’ pay was’ a good thing’. He said remuneration transparency had been ‘very, very inflationary’ and proposed the disclosure of the total pay of boards.
Scott also slammed board nomination committees as being “essentially a bit of a club”. “What executive is going to bring in someone who is going to challenge them?”
David Pitt-Watson, managing director of Hermes’s Focus Fund UK, declined to talk about Vodafone, but explained how the Focus Fund works.
He said the firm buys shares of a reputable company whose share price is depressed due to issues such as poor corporate governance, poor boardroom strategy or inadequate allocation.
Hermes generally becomes one of the five largest shareholders and engages with the company in a “constructive dialogue”.
UK Focus Fund, which was launched six years ago, had outperformed the market by 35% and clients, he said, are ‘pretty happy’ with Hermes’ performance.