Concealed votes knock "shareholder spring" off course

LONDON Tue Nov 20, 2012 6:12am IST

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LONDON (Reuters) - Asset managers running trillions of pounds of pension fund cash are falling short with efforts to stamp out excessive boardroom pay.

Only months after the so-called shareholder spring promised a revolution in the way executives are paid, research by industry group FairPensions suggests many of Britain's largest investment houses are still sidestepping client requests to disclose and explain votes on controversial pay plans.

"People in the UK who are saving for a pension often have almost no way of accessing information on how their fund has voted on executive pay deals," said Catherine Howarth, chief executive of FairPensions.

"As our report shows, even when they take the trouble to ask their fund, the responses received are often inadequate and dismissive."

The FairPensions Your Say on Pay initiative encouraged pension investors and ISA savers to ask their providers to reject remuneration plans they considered to be unjustified against a backdrop of recession and lackluster returns.

FairPensions was notified that only 26 responses were made by the 246 providers that received at least one email from clients, undermining the idea that this year's rebellions marked a watershed in transparent shareholder engagement.

Of those 26 responses, only 11 offered guidance and explanation of the fund manager's voting decision.

Only 11 providers disclosed their voting records and a paltry five offered direct links to web pages where savers could find more detail on these disclosures, the research showed.

The report raises questions about just how willingly fund managers have accepted enhanced stewardship responsibilities since the shareholder spring, which resulted in several CEOs, including Aviva's (AV.L) Andrew Moss and Trinity Mirror's Sly Bailey, being ousted after battles over pay.

Analyzing the public voting of 20 of the UK's largest asset managers on this year's highest-profile confrontations, FairPensions found inconsistencies both within and between asset managers on unacceptable pay packages from one firm to the next.

While it agrees that plans should be considered case by case, FairPensions said that investors deserved clearer guidance on what did and did not constitute a satisfactory plan.

Illustrating the grounds for confusion, FairPensions challenged the logic of this year's approval of a maximum bonus award of 923 percent of base salary for BP (BP.L) CEO Bob Dudley when a proposal based on 500 percent for WPP (WPP.L) CEO Martin Sorrell was rejected by almost 60 percent of the vote.

Only one of the 20 asset managers assessed in the report disclosed reasons for all significant votes, with a further eight giving reasons only for votes against management.

"If we are serious about tackling spiraling executive pay, we must empower savers to hold their pension and ISA funds to account," Howarth said.

(Editing by David Goodman)

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