Oil giant BP has lamented the difficulty of engaging with its shareholders if voting intentions are only communicated immediately before or directly after an AGM.
Emily Carey, head of governance, said the 2010 introduction of the UK Stewardship Code had seen many investors “stepping up and wanting more engagement”.
But this engagement, she argued, also comes with a cost.
“Interestingly, at the same, the votes are coming in later and later,” she said. “And also, disappointingly, we find that, if some investors aren’t voting with management, they don’t let us know until either the day of the meeting or the day afterwards, which makes engagement very difficult.”
Failure to inform company management of intentions to oppose a shareholder resolution or abstain from voting is in breach of the Code, which says it is “good practice” to inform management of such a decision if a matter cannot be addressed through engagement.
Carey, who was addressing a conference on engagement organised by the UK National Association of Pension Funds, spoke after the chairman of the Financial Reporting Council (FRC), Win Bischoff, warned against Stewardship Code signatories viewing it as a “tick-box” exercise.
The former Lloyds Banking Group chairman said some signatories were “failing to properly comply with [the Code’s] requirements, or to adhere to the spirit of the principles”.
“We see too often that managers have signed up to the Code just to ensure they are placed on owners’ shortlists,” he said.
“It is obviously hard for us to know this conclusively, but the fact some signatories have failed regularly to update their statements implies that, for some, signing up is merely part of a tick-box process rather than a basis for good-quality engagement.
“We need to find a fair, transparent means of encouraging managers to properly implement the Code.”
Bischoff said the FRC had previously considered de-listing those signatories that failed to update statements on a yearly basis, something he said was “a drastic solution”.
He later clarified that there was no intention on the part of the body to de-list those failing to file statements.
During the same speech, the chairman also warned of the risk of European regulation on engagement.
Discussing the proposed introduction of the Shareholder Rights Directive, he said: “If our principles-based system is found wanting, we will only have ourselves to blame if European legislation takes its place.”