The IMA today publishes the most comprehensive survey to date of UK institutional investors' engagement with the companies they invest in, entitled ‘Adherence to the FRC's Stewardship Code.'*
The survey, covering the period to 30 September 2010, reveals the widespread adherence by 50 UK institutional investors to the best practice set out in the Financial Reporting Council's Stewardship Code:
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Over 90% of major institutional investors now vote all or the great majority of their shares in UK companies; nearly two thirds now publish their voting records.
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At the time the survey was conducted, 43 out of 50 respondents had published a statement on adherence to the Code, and another six did so subsequently.
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Over 1,300 people focusing on stewardship activities are employed by 43 of the respondents to the survey.
For the first time, the report includes in-depth case studies** showing how institutional investors dealt with six controversial issues. In over 80% of cases, institutional investors believed they had achieved their set objectives in engaging on the issue.
The case studies cover a range of different issues, including remuneration, Board composition, environmental concerns, mergers and financing. All cases saw high levels of investor engagement with companies, which took a variety of forms, including meetings at senior Board level, consultation with other investors, and, in one case site visits. Outcomes varied from changes in Board policy to improved transparency; in one instance the outcome was reluctant acquiescence on the grounds that alternative courses were less satisfactory.
Liz Murrall, author of the survey and Director of Corporate Governance and Reporting of the IMA, said:
"The aim of our survey was to find out what stewardship means in practice. The final report not only demonstrates that investors are transparent in their engagement activities, but also shows the extent of their influence over companies.
"Our survey reveals a picture of real long-term commitment to achieving value for shareholders. Much of the dialogue between companies and their investors takes place behind closed doors, but our survey illuminates that process, showing real and productive engagement which ultimately improves the governance of major UK companies."
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