UK and European shareholders lag behind US for activism

Click to follow

US shareholders are at least four times more active than those in Europe and the UK, according to new research. British investors are wary of hurting share prices with formal proposals to the board, Peter Cziraki a doctoral candidate from Tilburg University, Netherlands, told delegates to the European Centre for Corporate Control in Lile. US stockholders however are forced to use the process to influence board decisions and make their issues known.

"There are less proposals in the UK because it signals that behind the scenes negotiations have failed which is bad for stock," said Mr Cziraki. "One reason for more proposals in the US is that there are more eccentrics there."

Peter Montagnon of the Association of British Insurers said that US shareholders have no right to vote on the dismissal and appointment of directors and so are forced to use formal proposals to have their say.

Mr Cziraki argues that, in Britain, investors have other ways to achieve their aims such as when BT's pension fund, Hermes, recently lobbied other minority stakeholders to block the appointment of a new chairman at German chip maker Infineon. It instead put forward a candidate of its own.