Co-op calls for end of corporate secrecy ahead of fresh round of AGM dissent

The Co-Operative Insurance Society issued a call yesterday for all institutional investors to end the "veil of secrecy" over corporate governance and to publish their voting records, ahead of another week of shareholder showdowns.

CIS, which prides itself on ethical and socially responsible investing, said trust in corporate Britain had fallen to a new low thanks to boardroom excess and something would have to be done to restore public confidence in big business. It says it is up to institutional investors to end the "excessive secrecy surrounding company meetings and open up their voting records to public scrutiny".

Finion O'Boyle, the chief operating officer at CIS, said yesterday: "We believe institutions have a duty to fully exercise their voting rights. Companies' annual general meetings provide an invaluable opportunity to express opinion and in the interests of transparency institutions should reveal how and why they have voted on any one issue.

"Ultimately, institutional investors are responsible to their customers or members, who are policyholders or individual members of pension funds. So why the need for secrecy once votes have been cast? The institutions should have the courage of their convictions and reveal where they stand on issues brought to vote," Mr O'Boyle said.

CIS's call to step up the pressure on company corporate governance records comes before another round of angry clashes between boards and shareholders over lavish pay. Doug Flynn, the chief executive of the advertising company Aegis, faces opposition this week over his two-year contract that would give him £1.5m if sacked.

Terry Smith, the head of the stockbroker Collins Stewart, is also facing a revolt over concerns that the company's share options scheme is not stretching enough.

Rolls-Royce will have to defend the position of Sir Robin Nicholson, a non-executive for 17 years, this week from concerns that he is no longer independent. The culmination will be the AGM of HSBC on Friday where the bank is likely to be grilled over the $37.5m (£25m) three-year deal granted to William Aldinger, head of the recently acquired Household International.

The intensifying spotlight on company boardroom behaviour is already beginning to have an effect. Kingfisher, which owns Comet and B&Q, decided last week to scrap two-year contracts for three of its directors and has strengthened the performance criteria for share options before its annual general meeting next week.

CIS put its entire voting record on its website last year, and was followed in doing this by Isis, the fund manager, earlier this month. Isis revealed it voted against 20 per cent of 1,138 new pay packages for directors. Isis's majority owner, the insurer Friends Provident, has also now started to publish its voting record on its website.

The belief in openness, however, is not shared by all of the investment community, many of whom believe that voting records should only be discussed between fund managers and their clients.

Hermes, the pension fund manager, last week encouraged more activism on corporate governance issues at the National Association of Pension Funds' conference in Glasgow, but backed away from pledging to reveal the details of all its votes. Michelle Edkins, the head of institutional relations at Hermes, said: "The discussions should be private. We want to support our investments, not damage their value through public spats. As a pension fund manager, we only act as the agent of the pension trustees. It would be up to our clients to reveal how we had voted."