On the go: Legal & General Investment Management has broken its record for voting against companies of which it is a shareholder, as the asset manager tries to cement its stewardship credentials.
Some 3,864 votes against company directors globally were cast by LGIM in 2018, according to an active ownership update, a 37 per cent increase from 2017.
It has taken a stand on issues including executive pay, climate change and diversity. Over half of the companies voted against were based outside of the UK.
Gender diversity was the most common grievance with UK boards, with over 100 votes cast, up from 13 in 2016. Following a number of high-profile accounting scandals, it also voted against a record number of companies on audit-related concerns.
The company’s stewardship policy has had mixed results in terms of persuading companies to change. In 2016, LGIM asked companies to align their executive pensions with that of their workforce. The number of companies that subsequently amended their policy on executive pensions were few and many of those that did, did not make sufficient reductions.
Therefore, from 2020, LGIM will vote against the remuneration policy at UK companies where they have not addressed this disparity.
Executive remuneration continues to be a key area of engagement, and in 2018 LGIM voted against more than a third of pay packages globally, largely due to the lack of performance conditions underpinning executive pay.
Commenting on the report, Sacha Sadan, director of corporate governance at LGIM, said: “We are encouraged by much progress being made but there remains more to be done and real success will be dependent on collaboration.”
Meanwhile, in a new paper, ‘Investor stewardship: one hand on the wheel?’, Willis Towers Watson has called on the investment community to redouble its stewardship efforts.
Stephen Miles, senior director, head of equities, Willis Towers Watson, stressed: “As large index-tracking asset managers continue to grow and become increasingly dominant shareholders of many companies, so grows their responsibility for high-quality stewardship. Some may see it as an inconvenient responsibility as it involves time-consuming and, at times, uncomfortable conversations with company management. But stewardship is a critical part of corporate oversight and value creation within the industry.”
