UK - The Investment Management Association is planning a radical overhaul of the proxy voting process to ensure that schemes' votes are registered by companies.
The initiative follows the events at Unilever’s annual meeting in August, where the consumer goods giant found, despite fund managers’ claims,that 50% of its shareholders did not vote, and that 10 of its biggest institutional shareholders were among the absentees.
But the vast majority of fund managers insist that they do vote and the IMA claims that the problem lies with the “inefficient” voting process.
Chief executive Richard Saunders says the association is currently drawing up plans with other interested parties and it wants to have made “progress” by next year’s AGM season.
Saunders said: “Proxy voting is not an efficient process and votes tend to fall through the cracks between investment managers, custodians and registrars.
“We want to use the existing shareholder groups to work out ways of how this can be addressed and what we need to push through.”
Morley Fund Management head of corporate governance Anita Skipper welcomed the move but pointed out that people had been “trying to sort this out for years”.
She added: “There are so many stages in the voting process that nobody has any real accountability for what happens; you can’t get the buy-in from the various constituents as it means new systems, money and time.”
However, State Street disputed the claims and insisted that the automated voting process was efficient.
Head of relationship management Martha Whitman said the custody giant’s internal research found that 39% of all fund managers, globally, voted in 2002.
“Based on what our securities services people found, the majority of fund managers don’t actually vote and there are very, very few that they have problems with.
“I think that in a lot of cases, they’ll say they’re voting with management and so they don’t bother. Most fund managers say they vote, but our statistics say that only 39% do.”
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