UK - Shareholders have been urged to scrutinise corporate governance arrangements ahead of next month's proxy voting season.
Corporate governance experts have warned schemes to be watchful of companies looking to exploit changes in the wake of the Derek Higgs review of the combined code.
Recent changes – introduced in August last year – now allow chairmen to liaise between executive and independent boards of directors while not classifying themselves as either.
Proxy voting agency Manifest said Liberty International’s annual general meeting on Wednesday would see this issue contested as the first investor backlash to a company using the revised code to its own advantage.
Manifest says it is ridiculous to suggest Liberty chairman Donald Gordon is “independent” and is urging schemes to vote against the firm’s remuneration report.
Gordon – who has a 3.6% shareholding in the firm – is paid more than the chief executive, nearly three times the average salary of a FTSE100 chairman, while his son is an executive on the board.
Gordon senior has previously been an executive chairman, received additional remuneration of £385,000 in 2003 while his son – also classified as “independent” – sits on the non-executive board of directors.
Manifest head of research Yvonne Stevens said: “We are seeing a number of firms – including mining company Rio Tinto – trying to take advantage of the revisions to Higgs in a similar way.
“Unfortunately, there is little shareholders can do to voice concerns. One option is to vote against a firm’s remuneration report – as seen last year at GlaxoSmithKline – and it will be interesting to see how companies react if shareholders oppose changes to arrangements ahead of this year’s proxy voting season.”
Investor lobby group Pensions Investment Research Consultants also questioned the “independence” of a number of Liberty’s non-executive directors.
The Pensions Regulator (TPR) has set out plans to use "new regulatory initiatives" with over 1,000 schemes as it aims to tighten its regulatory grip and boost member outcomes.
HM Revenue and Customs (HMRC) has announced it is delaying the provision of data that will enable pension schemes to confirm the guaranteed minimum pension (GMP) benefits to pay to members until the end of the year.
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