An informative article in the Financial Times on the influence of proxy advisors in the UK, particularly topical in this so-called “shareholder spring”. (As an aside, it’s sad that by using that term, corporate governance commentators implicitly compare themselves to the brave citizens of Arab states who have literally fought, and died, for change.)
The US-based Institutional Shareholder Services (ISS) is now advising around a quarter of shareholders in FTSE listed companies:
“ISS, which first broke into the UK market in 2004, advises about 25 per cent of shareholders in FTSE listed companies, according to investors.
It is now the most influential of the shareholder advisory groups, having overtaken the Association of British Insurers and the National Association of Pension Funds, which represent about 30 per cent of FTSE shareholders between them.”
The FT story includes this unsourced, unnamed quote…:
“I once had a shareholder tell me he was totally happy with my company, then he voted against an important matter at our AGM,” says one chief executive of a FTSE listed company. “When I challenged him over it. He said, ‘sorry, I outsourced that’.”
…which nevertheless encapsulates the concerns around an over-reliance on proxy advisors by fiduciaries. As we reported here, the European Securities and Markets Authority published a discussion paper in March 2012 on the proxy advisory industry and options for its possible regulation.
Watchdog targets the proxy advisors – Financial Times