Money managers under the microscope
Britain’s largest investors are gearing up to take on troublesome boards. A new body will look at addressing investor concerns over some of the most contentious issues of the day, mainly pay and strategy. You can read the story here
This kind of collective action by UK’s biggest investors is exactly the kind of thing needed to make companies to sit up and take notice of their views. After being ravaged by the credit crisis, companies have been forced to go, cap-in-hand, to investors for fresh capital injections, forcing them to at least listen to what their biggest shareholders are saying.
This is in stark contrast to the stance taken by some companies in the run up to the crisis. Last year, the IMA revealed that 21 fund firms had a total of 59 separate meetings with RBS over the roles of the chairman and CEO. And even a push from one of its its largest investor Legal & General Investment Management had little effect. The duo did not step down until after the government was forced to bail out the bank in October 2008.
The new body will not replace either the ABI’s Investment Committee or the Institutional Shareholders Committee which has so far led the debate on governance. The hope, presumably, is that investors will be able to leverage their new-found influence to effect change at company boards in a much more efficient and responsible manner.