Rigid bureaucratic practices governing shareholder votes are hindering institutional investors from having a powerful impact on key issues such as directors' pay, the investment management industry warned yesterday.
Lindsay Tomlinson, European chief executive of Barclays Global Investors, said some companies had rejected votes cast by entire blocks of shares constituting "millions of votes" just because of a discrepancy of a "couple of shares" in the size of the holding.
Mr Tomlinson, who is also chairman of the Investment Management Association, raised the problem in front of a Department of Trade and Industry select committee convened to examine executive pay after the department issued a white paper on the subject last month.
The Government gave shareholders the right to vote on companies' remuneration reports for the first time this year. The move was intended to be a powerful tool for investors to influence executive pay and has already caused massive embarrassment for GlaxoSmithKline, WPP, Shire and other companies whose investors have voted in large numbers against lavish pay packages.
However, the senior fund managers giving evidence highlighted the difficulties in the system and called for voting to be made much easier, for example by introducing an electronic system.
Anita Skipper, head of corporate governance at Morley Fund Management, said it was sometimes difficult to get hold of key information such as a director's contract, which companies often only make available just before an annual general meeting.Reuse content