Top investors hit back at FTSE 100 firms after claims of governance ‘box ticking’
A group of top investors has looked to shift blame onto FTSE 100 chiefs for a breakdown in the relationship between firms and their major shareholders today, after top chairs criticised investors’ approach to corporate governance last year.
The Investor Forum, which represents investors holding more than £800bn worth of UK equities, has written to FTSE 100 bosses claiming that they should take their fair share of responsibility for a slide in relations between shareholders and the boardroom.
The letter from the group, first reported by the Financial Times, follows a report from PR agency Tulchan last year which quoted chairs of FTSE 100 firms describing a number of governance issues they said were hampering growth, including objections on executive pay.
Bosses anonymously quoted in the report criticised “box ticking” exercises in stewardship and questioned investors’ decision to rely on proxy groups to determine their voting decisions at annual general meetings.
The criticism follows a perceived rise in the power of groups like Institutional Shareholder Services and Glass Lewis, who help guide shareholders’ decision when voting on policies like executive pay and net zero plans.
However, the letter from the Investor Forum hit back at the claims and said the report was not an “accurate reflection of their relationship with companies”.
The group argued companies should shoulder some of the blame for failing to understand shareholders’ responsibility to their own investors and the “seismic shift in client scrutiny” that they are now subject to.
The Investor Forum acknowledged the frustration of some boards over the role of proxy group but has now called for meetings between boards and their big shareholders to ease the dispute, ahead of the annual general meeting season in the UK when boards face down their shareholders.