UK - Pension funds have defended their use of "abstentions" on corporate governance issues that do not comply with recommendations in the Higgs report.
The NAPF said firms should see abstentions as a “warning shot across the bows”, highlighting issues which needed particular attention.
The association spoke out after 18% of proxy votes at Carlton Communications’ annual general meeting abstained on approving the company’s remuneration report.
The report had failed to include clear details about the structure of performance-related pay.
A total of 13% of proxy voters also abstained on the reelection of Michael Green as chairman.
An NAPF spokeswoman said: “A recommendation to abstain is a shot across a company’s bows, but can also be a suggestion on how to improve.”
She added that the NAPF recommends abstention on about 10% of resolutions compared with only 2% of recommendations which are “against”.
She explained that the NAPF’s Voting Issue Service reports were part of a “process of engagement. The aim is not simply to chastise the companies but to achieve good corporate governance across the board.”
Axa Investment Managers’ UK managing director Jim Stride said: “The abstain vote will send a very useful message to the remuneration committee – that it needs to take a second look at whatever it is that is causing concern among shareholders.”
*Manifest Information Systems revealed late last year that shareholder voting increased marginally in 2002.
Its Proxy Poll Votes 2002 Report showed that shareholder voting levels stood at 55.8% between January and July last year against 52.7% in 2001.
This week's top stories included Cardano announcing plans to acquire Now Pensions from a Dutch pension fund later this year.
Royal Bank of Scotland (RBS) faces a £102m impact on liabilities as a result of equalising guaranteed minimum pensions (GMPs), according to its annual results.
Malcolm Mclean says getting the channels of communication right and engaging more openly is a good starting point