Standard Life Investments continues to hold boards to account

01 February 2017

Standard Life Investments, the global investment manager, has issued its Governance & Stewardship Annual Review for 2016. The report provides an account of its global engagement and voting activities during the year as well as insights into Standard Life Investments’ views on some of the key international developments and topical issues in governance & stewardship.

During 2016 key areas of focus for Standard Life Investments when voting were board composition, mergers & acquisitions, pre-emption rights, auditors, remuneration and shareholder rights. Globally there were 215 meetings and other engagement activities with companies. In addition, there were 201 voting engagements and 105 remuneration consultations.

Commenting, Euan Stirling, Head of Stewardship & ESG Investment, Standard Life Investments, said:

Euan Stirling

“The original shareholder spring of 2012 was replayed in 2016, with widespread dissent in shareholder ranks against excessive pay for management. We place particular emphasis on corporate culture and the impact of excessive remuneration and the responsibility of shareholders to hold boards to account. The serious implications of failure in these areas suggest that further remedies are likely to be sought.

“The UK binding vote on remuneration policy is now in its third year. During 2017, many companies will need to seek authority for a new remuneration policy and we have already been consulted by a significant number of companies on this matter. While the binding remuneration policy vote has restricted the amount of discretion available to remuneration committees, it has not addressed the underlying trend of increasing quantum. As active investment managers with a focus on active, constructive engagement we believe that we can positively influence the companies in which we invest.”

The voting summary for 2016 is as follows:

  • Shareholder meetings at which client shares were voted – 1,569
  • Number of resolutions voted – 19,051
  • Shareholder meetings at which shares were voted against management recommendations on one or more resolution – 430
  • Number of resolutions voted against management recommendations – 964
  • Meetings where Standard Life Investments abstained on one or more resolutions – 143
  • Number of resolutions abstained – 199

The reasons for voting against management recommendations were because of remuneration and share schemes (42%), pre-emption/dilution matters (26%), board matters (12%) and other issues (20%).

The report details voting at Babcock, Barclays, BP, Reckitt Benckiser Group, Sky and Sports Direct International and gives commentary on engagement activities at Vedanta Resources, WPP, BHP Billiton and Volkswagen.