Move to make funds vote

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The Independent Online
ALASTAIR ROSS GOOBEY, the scourge of incompetent directors who receive big pay-offs, has begun a new campaign - to force the biggest institutional investors to vote their shares in all circumstances.

Mr Ross Goobey, who is chief executive of PosTel, the manager of the British Telecom and Post Office pension funds, has lobbied ministers on the issue. He wants to see legislation in the forthcoming Pensions Bill. His campaign has gained impetus since the furore over the 75 per cent pay rise awarded to Cedric Brown, the chief executive of British Gas. John Major has asked the Cabinet committee, chaired by David Hunt, the Chancellor of the Duchy of Lancaster, to suggest ways of curbing excessive boardroom pay.

Mr Ross Goobey said: ``One way in which share ownership can be made more responsible is by legislation in the new Pensions Bill forcing pension funds to lodge their voting proxies."

But Carol Galley, the head of UK institutional investment at Mercury Asset Management, opposes compulsory voting.

Some institutions believe compulsory voting might hit a company's share price by drawing attention to corporate governance shortcomings. Voting also takes up investment managers' time. According to a survey by the National Association of Pension Funds in1993, only 26 per cent of pension funds vote whenever practicable; 31 per cent vote only on contentious issues; and 25 per cent never vote.

Mr Ross Goobey has helped trigger the widespread downgrading of directors' three-year rolling contracts, which can lead to big pay-offs, by threatening to vote against the re-election of offending directors.

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