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Shareholder activism on rise as regulators get tough

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Shareholder activism is increasing, and regulators are becoming more assertive in policing standards of corporate governance, according to UK asset manager Standard Life Investments (SLI).

In its 2013 annual review of governance and stewardship – focusing on its own work with companies on behalf of investors – SLI said last year was characterised by “responsibilities and regulations” following 2012’s so-called Shareholder Spring.

It said the emerging longer-term picture described in its report was one of increased shareholder activism. 

The firm said: “Regulators around the world introduced new laws and regulations designed to strengthen corporate governance, especially as it relates to executive pay and audit issues, giving shareholders new rights to hold boards of companies to account.”

The most striking example of this was the introduction in the UK of a binding vote on executive pay policy, it said.

The vote gives shareholders a right of veto, rather than just a right to advise, on boardroom pay, the firm explained.

The annual review included details of companies where it had been influential in bringing about changes.

Examples included RSA Insurance Group and Lazard, SLI said.

Last year’s AGM season in the US had been particularly interesting, it added, with attention focusing on JP Morgan’s meeting, where a shareholder resolution sought to separate the roles of chairman and chief executive. 

In the UK, the issue of executive pay continued to dominate.

SLI said that, after the experience of the Shareholder Spring in 2012, boards had been anxious to make sure their company was not the victim of investors’ ire.

“As a consequence, we witnessed a high level of consultation between remuneration committees and investors designed to ensure that interests and views were appropriately aligned,” SLI said. 

A number of pay policies were improved and a number of controversial new schemes never saw the light of day, it added.

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