Concern over pension fund voting levels

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The Independent Online
THE NATIONAL Association of Pension Funds says it is considering launching an independent inquiry into low levels of voting at company meetings by its members. It says members' voting levels are falling despite the efforts of Margaret Beckett and the Hampel committee on corporate governance which submits its final document this week.

The association is concerned that despite pressure applied by the Government, and the impending code, voting levels are still below 40 per cent and appear to be falling.

"We are very concerned," an association spokesman said. "1998 is really a test year for voting performance and at the end of it Margaret Beckett has said she will look at the situation and legislation is possible."

The association says it is particularly worried given that more funds have adopted formal voting policies and many have appointed managers responsible for co-ordination and policing those policies. "We have done all we can to persuade members," the spokesman said. "But we may have to look at commissioning an investigation into why this is not being put into practice."

New figures produced by Manifest, the corporate governance consultancy, show that proxy voting levels are stuck at below 40 per cent.

Draft figures to be published later this week show that between May and September 1997 the average number of votes cast at company annual meetings was 38.4 per cent. Between May 1997 and April 1998 the figure was 36.98 per cent.

Voting at FTSE100 meetings fell from 43.4 per cent to 41.53 per cent. But among second-line FTSE250 companies the fall was dramatic. In May to September 1997 the number of votes cast was 47.3 per cent, falling to 42.67 more recently.

The highest level of voting was 82 per cent for one company, which had issued a profits warning and undergone a strategic re-structuring. The lowest vote level was 17 per cent. Investment trusts continue to receive low levels of voting support with 1-7 per cent not unusual.

A key feature of the Hampel committee was a call to institutions to adopt a considered policy on voting their shares and to make their votes count.

The report made several key recommendations that are expected to be incorporated into a "supercode". These include the appointment of a "lead" non-executive director and a suggestion that companies use their annual meetings to communicate more information to shareholders through presentations.

The report did not recommend that the separation of the chairman and chief executive positions be made a firm rule and supported the unitary board over continental two-tier board structures.