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Shareholder voting rises smartly in UK

UK – There has been a sharp increase in voting among UK shareholders this year, along with a growing trend of dissention, Pensions Investment Research Consultants (PIRC) reports.

The average voting level rose to 55% from 51% for FTSE 350 companies in the period from July 2001 to July 2002, according to its annual review of proxy voting.

PIRC says UK listed companies are paying more attention to the level of proxy votes than every before. Two companies even withdrew resolutions in the face of substantial hostile proxy voting.

Although directors’ pay remained important, it was not the main issue which attracted dissenting votes. Share schemes exceeding normal dilution guidelines was the most contentious issue, followed by directors’ pay issues such as excessive share schemes and remuneration policies.

David Gould, investment director at the National Association of Pension Funds (NAPF), says it welcomed the increase in shareholder activism and believes it is partly in response to the Myners Review, which called for greater activity on the behalf of shareholders.

“It is pleasing to see that shareholders are taking greater responsibility in exercising their rights in opposing resolutions that do not fit with good corporate governance. The prominence of corporate governance has also increased significantly in the past year and has no doubt also had an effect," he says.

Despite the gain in turnout, Paul Marsland, PIRC manager, says it is clear that some shareholders are still not voting. “The Myners Review and the Company Law Review have clearly identified lack of activism by shareholders as a problem for the market. It remains to be seen whether the application of the Myners’ Principle will improve matters. “

“Events over the past 12 months have shown that if investors fail to exercise effective oversight over companies, the value of their investments can be put at risk,” he added.

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