It’s Getting More Difficult to Vote

It’s certainly getting more difficult to vote of late, and I am not talking about voting at General Elections but just for resolutions at the General Meetings of companies we own. This seems to be a particular problem with Capita Registrars. Here’s some examples:

  1. Whitbread: As a personal crest member, I am on the register and expect to be sent an annual report and proxy voting form (and at least the latter on paper). But no longer it seems. Whitbread only sent me a single page letter advising me that the Annual Report and AGM Notice were available on-line and I could vote on-line. No paper Annual Report when I had not opted to not receive it. So I phone them up to ask for a paper copy and a proxy voting form. They (twice) sent me the previous year’s annual report by mistake and no voting form until reminded.
  2. National Grid. Similarly I only received a single page letter. So I tried to vote on-line. Even though the instructions were unclear, after speaking to Capita on the phone, they could not advise me how to get it to work. Simply rejected my ID. They seem to have a technical problem and clearly the system has not been adequately tested.

Is it not ridiculous that one should have such difficulties with voting, getting a notice of the meeting or an Annual Report? This is another example of how shareholder democracy is being undermined.

I will be raising these issues at the AGMs of these companies. But it is really annoying to have to waste time on such matters. If everyone on the register (or in a beneficial holding) was sent a paper proxy voting form, that would be one simple solution and should be mandated in law.

Roger Lawson

Voting Your Shares – It’s Important!

The main Annual General Meeting season is now upon us and those investors who hold their shares on the register will have been receiving Annual Reports on paper or electronically. If you hold your shares in a nominee account, some brokers will send you an Annual Report or notify you of when an AGM is coming up. Otherwise you’ll need to monitor company announcements. But the key thing is to VOTE YOUR SHARES.

You are after all a part owner of the company and the votes at an AGM enable you to determine who should be the directors, what they get paid, whether they can issue more shares and many other important aspects. The voting by institutional investors used to be sloppy, but now it is often over 70% while they frequently meet the same difficulties as private investors in actually submitting votes. But private investors are now laggards and need to up their game.

Yes it would help if the shareholding system was reformed (see our Shareholder Rights campaign here for more information on that: http://www.sharesoc.org/shareholder-rights.html ) . But in the meantime here are some tips to assist you:

If you hold a paper share certificate or are a Personal Crest Member then it is easy. You will be sent a paper voting form or can opt in for electronic notification. You can then vote by post or electronically. Incidentally even if most of your shares are held in a nominee account it’s worth holding at least one share on the register because that ensures you will be notified of AGMs and can attend the meeting without question.

If your shares are held in a nominee account, as most are nowadays, then it gets a bit more complicated. In essence you will have to get your nominee operator (stockbroker) to submit your votes on your behalf because they technically own the shares not you (i.e. their name is on the share register). You just have a “beneficial interest” in them. But the voting rights are still yours.

If your shares are held in an ISA account then the ISA rules require that the nominee operator will vote your shares when requested, i.e. they have a legal obligation to do so. The best brokers provide easy electronic systems to enable you to do that. But others will do so upon request. For non-ISA nominee accounts, the legal position is not as clear cut but in general all good brokers will vote your shares when requested.

If you wish to attend the AGM in person then you will also need to ask for a “Letter of Representation” if your shares are in a nominee account.

Now you may find the “Notice of the Annual General Meeting” which lists the resolutions to be voted upon a complex and daunting document at first glance. But in reality most of the resolutions are standard ones that appear every year. However that does not mean that you should vote “Yes” to all of them or blindly follow the directors recommendations. There is a lot of guidance on how to vote at General Meetings on this page of the ShareSoc web site: http://www.sharesoc.org/voting%20at%20general%20meetings.html

We also provide guidance on attending General Meetings on this web page: http://www.sharesoc.org/general_meetings.html with a comprehensive document on “How to Run a General Meeting” which you can give to company directors or the Company Secretary if you think the meeting was badly run (and lots are).

These areas may appear complex to new investors but they are worth learning about. Some General Meetings are particularly crucial as regards who is running a company and its future direction; and we all want to control outrageous pay levels that have been appearing in many companies. The votes enable you to do that. One of the key benefits of Full Membership of ShareSoc is that you can phone us up and ask for advice on how to vote and how to attend an AGM. The latter is always worth doing if you can spare the time. But if you cannot attend in person, just make sure YOU GET YOUR VOTE IN.

ShareSoc does sometimes issue general voting recommendations via Press Releases in particularly extreme cases – for example on Persimmon and Alliance Trust recently.

REMEMBER VOTING AT COMPANY GENERAL MEETINGS IS LIKE VOTING AT GENERAL ELECTIONS. IF YOU DON’T VOTE THEN YOU ARE LIKELY TO GET LEADERS WHO YOU DON’T LIKE AND WHO PAY THEMSELVES TOO MUCH. SO SHAREHOLDER DEMOCRACY IS AS IMPORTANT AS POLITICAL DEMOCRACY AND THOSE WHO DON’T VOTE BECAUSE THEY CAN’T BE BOTHERED WILL LIKELY SUFFER THE CONSEQUENCES. SO PLEASE DO VOTE.

Roger Lawson

Shareholder voting, remuneration and BG Group

Manifest, a proxy advisory service, have reported on the voting at Annual General Meetings recently. It was good to read that there was significant opposition to the change to 14 days notice at the General Meetings of both Arm and Anglo-American – 18% at the latter and even higher at the former. This commonly arises where there are substantial overseas holders who find difficulty in getting in their proxy votes in time because of the complexity of the voting chain. But the surprise is that there is not much higher opposition from private shareholders to this desire by companies to override European Directives and move to 14 days from 21. Has there ever been an example where 14 days was really critical to a company?  And if the vote is of that importance, it is surely important that everyone gets the opportunity to vote.

Opposition is rising to companies putting such resolutions on the agenda and shareholders should certainly think about it before they vote “Yes” rather than “No”.

But the bad news is that opposition to remuneration reports or policy seems to be more muted of late. Now shareholders actually have a vote, they seem reluctant to use it to oppose over generous pay schemes. This appears to be a wish not to offend the sensibilities of the board of directors, or simple unwillingness to get to grips with the complexities of modern remuneration schemes, rather than any  real examination of the issues.  This was reflected yesterday at the BG Group AGM where only one in five shareholders opposed the remuneration report (ShareSoc director Mark Bentley spoke at the meeting against the package of £11.7m that might be received by Mr Lund  – we hope to report on this more, but it was widely covered in the national media). Although it was widely reported as significant opposition, why did anyone vote to support the remuneration report when it is only advisory in any case? It is this kind of weak opposition to outrageous pay schemes that mean they still get put forward by remuneration committees and approved by boards. Plus of course requested by management who are receiving them.

Roger Lawson

Shareholder Rights campaign launched

Last week ShareSoc launched a campaign to improve shareholder rights with a meeting in London. It focussed on the problems associated with nominee accounts and the adopted legal requirement to replace paper share certificates with an electronic system in a few years time.

There was an impressive line-up of speakers at the meeting which included John Kay (author of the Kay Review and FT writer), Michael Kempe from Capita representing the ICSA Registrars Group, Peter Swabey from ICSA, John Lee (Lord Lee of Trafford, a well known FT writer and private investor), Cas Sydorowitz from Georgeson Inc, Paul Scott, a well known private investor and blogger and Roger Lawson from ShareSoc. A full report of this lively event, and the 30 page document given to delegates which argues the case for change, are available from this web page: http://www.sharesoc.org/shareholder-rights.html

The numerous problems associated with the existing voting arrangements and the use of nominee accounts were highlighted by several speakers. Shareholder engagement and activism is often thwarted to the detriment of good corporate governance. Roger Lawson emphasised the need to put everyone on the share register so that there are “Guaranteed Votes for All Shareholders” which is the title of the supporting document.

To enable investors to support our campaign ShareSoc has also launched an on-line petition which is present here: http://www.sharesoc.org/sr-petition.html .

Please do sign it so we can get some changes made. 

Roger Lawson

Nominee system defeats shareholder voting

ShareSoc  has recently issued a survey to our Members and the public covering their voting and attendance at General Meetings and the prevalence of the use of nominee accounts. The results demonstrate that the nominee account system undermines shareholders’ ability to vote at the General Meetings of the companies they own.

Nominee accounts are now the commonest form in which investors hold shares in companies (89% of ShareSoc Members held some shares in a nominee account, as opposed to the use of Personal Crest accounts or paper share certificates).

When shares are held directly, only 7% of our Members never bother to submit a proxy voting form. But for those shares held in nominee accounts the number rose to 42%. Public respondents (i.e. non Members) were even less likely to vote their shares.

Investors not enfranchised. The reason for these low numbers is primarily that only 18% are actually given information and voting rights by their stockbroker or platform operator. Indeed only 38% of our Members and 31% of Public respondents were aware that the ISA regulations required nominee operators to provide voting rights.

Investors also feel disenfranchised. 74% of our Members and 70% of the Public confirmed that they felt disenfranchised by the existing nominee system and proxy voting arrangements.

There were also a large number of individual comments on the difficulties of voting, particularly where nominee accounts were in use – “too much hassle” was a typical one.

Summary. The results of this survey demonstrate that the nominee account system dramatically reduces the number of investors who submit proxy voting forms for the companies in which they hold shares. Even among ShareSoc Members, who are more likely to understand how to exercise such votes, they are often unable to do so because only a small minority use a broker who provides information and voting rights.  There is also general ignorance of the obligation of ISA operators to provide voting rights.

The results from this survey will be used in the ShareSoc Shareholder Rights campaign which is under development.

Please contact ShareSoc if you require more information on the questions posed in these surveys and the details of the responses.