Companies should offer a new category of abstention votes at annual general meetings, according to the leading reformer of the investment industry, Paul Myners.
Mr Myners, a former chairman of Gartmore, called yesterday for companies to agree to offer a new "vote withheld" section on voting forms, to allow shareholders to send a clear warning signal if they disapprove of a board's decision on a particular subject, such as executive pay.
Unveiling an action plan on ways to improve Britain's shareholder voting system, Mr Myners also called on companies to publish the result of votes. At the moment, shareholders can abstain at annual meetings but companies do not have to disclose how many do - only publishing for and against votes.
However, as many institutional investors currently opt to abstain rather than vote resolutions down if they oppose part of the annual report, the true picture of shareholder sentiment can be distorted.
Mr Myners, who published a hard-hitting report into the fund management industry in May 2000, was commissioned to compile a report for the Shareholder Working Group. The group is made up of a range of representatives from the investment community, such as the National Association of Pension Funds and the Association of British Insurers.
Mr Myners called on pension fund trustees particularly to become far more clued up about companies their funds are invested in, so they can request fund managers to vote according to their wishes. He also called on fund managers to use electronic voting as a way of ensuring votes count.
Jacqui Smith, industry minister, said: "I hope businesses will welcome and implement the recommendations."
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