UK - The National Association of Pension Funds has updated its corporate governance policy and voting guidelines ahead of the 2009 annual general meeting season.
The voting guidelines are designed to assist shareholders and others in interpreting the Combined Code, on which the guidelines are based, when considering voting at company meetings.
However, the NAPF said no changes have been made to remuneration policy - but urged investors to take a stronger stance on companies' application of the Combined Code, ensuring, that executive pay policy should be clearly aligned with the pay policies in the company as a whole.
NAPF head of corporate governance David Paterson said: "In the light of the current economic climate it is likely that investors will take a less tolerant view of non-compliance with the Combined Code especially where the explanation is deemed unsatisfactory.
"The NAPF will be consulting with members in the coming months on ways in which the NAPF Policy might be further amended in order to better protect the interests of long-term investors."
The new guidelines added to the policy include:
Non-audit fees: guidelines have been changed to propose a non-audit fee cap of 100% of audit, unless there is an explanation of any exceptional circumstances that might apply for fees to be higher.
Combined chairman/chief executive officer: where the role of chairman and chief executive officer is combined for more than a year, investors my consider an actively withheld vote or vote against the board chairman.
Continued material non-compliance with the Combined Code without adequate explanation: investors consider that the chairman is ultimately responsible for the maintenance and oversight of a strong governance policy. In the event of continued material non-compliance, investors may consider an actively withheld vote or vote against the re-election of the board chairman.
Rule 9 waiver: rule 9 of the Takeover Code requires an offer for all the shares in a company when an individual, or group of individuals acting together, acquires over 30% of the voting rights in a public company. Waivers are usually sought where a company proposes to institute a share buy-back programme in which a large investor or concert party intends not to participate. Investors are not, for the most part, supportive of rule 9 waivers and the NAPF recommends normally voting against a resolution proposing a rule 9 waiver.
The NAPF corporate governance and voting guidelines can be found at: www.napf.co.uk/Policy/Governance.cfm
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