UK - Many institutional shareholders are failing to exercise responsible ownership and should be forced to report on how they use their voting rights, according to an annual survey by Pensions Investment Research Consultants (PIRC).
The criticism follows findings revealing that proxy voting levels at UK companies have failed to show any major increase this year. With a median turnout of 48.9% in the FTSE350 (51.4% in the FTSE All Share Index), 2001 is the third successive year without any meaningful increase, said the firm.
Alan MacDougall, PIRC managing director, said: “With half of shareholders not bothering to vote, many institutional shareholders are failing in their duty to exercise responsible ownership.
“The only alternative is for government action to force investors to consider, use and report on how they use their voting rights”.
PIRC added that even more contentious meetings can fail to attract majority turnouts. At Marconi this year, only 40% of shares were voted. Three FTSE100 companies, namely Daily Mail & General, Standard Chartered, Amvescap, had a turnout of less than 20%, according to the survey.
MacDougall drew attention to the Company Law Review and the Myners Report which also expressed concerns about low levels of voting, and the need for institutional investors to be more active in corporate governance.
He added: “Whatever the technical problems involved in voting, there appears to be a level of apathy among some institutions which has the potential to undermine the whole system.”
By Janet Du Chenne
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