UK- Tony Watson (pictured), the chief executive of Hermes Pensions Management, has called on the government, trade unions, investors and business to end what he called the perceived short-termism in the City.
Speaking at the annual conference of the Institute of Chartered Accounts in England and Wales, Watson pointed out that the quoted companies which feel they suffer from the perceived short-termism of investing institutions hire those same institutions to manage their corporate pension funds.
He said that if the companies’ pension funds were to instruct these institutions to adopt a long-term approach to investment this would bring about an alignment of interest of all the parties and so put an end to the problem.
Institutions should also be required to sign up to the Institutional Shareholders Committee’s Code and should have to comply fully with the code, or explain where they were deficient and how they would remedy the situation, he added.
In addition, Watson emphasised the need for institutions to show how their investment processes were designed for the long term and how they discharged their ownership obligations. He also demanded better disclosure of investment managers’ pay and the long-term principles on which it was based.
He also called for the disclosure of voting by institutions and the declaration of interests in derivatives.
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