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date: 15 November 2010

embargo: 00.01hrs Tuesday 16 November 2010

TUC survey shows a sharp divide in voting stances taken by institutional investors

There was a sharp divide in the voting stances taken by institutional investors in relation to resolutions put by management at company AGMs last year, according to the latest TUC fund manager voting survey published today (Tuesday).

Whilst a minority of institutional investors supported over 70 per cent of all management resolutions, at the other end of the spectrum, a minority supported less than 40 per cent.

The eighth annual fund manager voting survey, published to coincide with the TUC Pension Trustee Conference taking place in central London today, analyses the voting records of more than 20 fund managers and pension funds between July 2008 and December 2009.

Remuneration was the most popular issue for investor dissent, with the majority of investors supporting less than a third of remuneration reports. However, there were significant differences in the positions taken by investors - with a handful voting for more than 60 per cent of company remuneration reports.

The TUC survey cites an example of how unions are encouraging fund managers to engage more on employment issues, by highlighting a resolution drawn up by Unite at the Tesco AGM last year which related to concerns about labour standards in the meat supply industry.

The survey shows that while an increasing number of investors now make some voting data publicly available, the quality and frequency of this information varies. Survey responses show that only nine investors disclosed all their votes cast, six revealed just their 'oppose or abstain' votes, while three provided only headline statistics on voting, with no reference to specific companies.

There are also wide variations in how frequently the voting data is updated and the length of time it is available on websites, making comparisons between investors and over time impossible. The TUC believes that the inconsistent quality of this publicly available data shows that the voluntary approach to voting disclosure has failed, and mandatory disclosure of voting records is now needed.

Despite many investors acknowledging that a failure to engage properly with banks helped contribute to the financial crash, investors' behaviour is still marred by a lack of transparency, making it hard for shareholders, including pension trustees and ordinary scheme members, to hold companies to account, says the TUC survey.

TUC General Secretary Brendan Barber said: 'The financial crisis perfectly illustrates the weakness of shareholder involvement in the companies they own.

'Had investors been more vigilant, the banks would not have been able to take such reckless risks with their assets, and the worst effects of the financial crisis could have been avoided. We need now more than ever a much more robust system of investor engagement that replaces the complacency that has characterised some investor and company relationships in the past.

'There is still an accountability gap in UK boardrooms and ordinary shareholders need to make companies more accountable for their decisions.

'Reform of our corporate culture is long overdue. The government should start by enforcing mandatory disclosure of voting records so that at the very least ordinary people are able to find out how their life savings are being invested.'

NOTES TO EDITORS:

- The 2010 fund manager voting survey is available to download at www.tuc.org.uk/extras/fundmanagervotingsurvey2010.pdf

- Speakers at the TUC Pensions Trustee conference include Pensions Minister Steve Webb, Shadow Pensions Minister Rachel Reeves and Brendan Barber. The conference takes place at Congress House, 23-28 Great Russell Street, London WC1B 3LS between 9.30am and 4.30pm. To apply for media accreditation to the Pensions Trustee conference, contact Jennifer Mann on 020 7467 1222 or email trusteenetwork@tuc.org.uk

- Twenty two investment organisations took part, compared to twenty three last year.

- The TUC supports a network of 1,000 trade union trustees. It provides newsletters, events, briefings and training for members of the network and acts as a point of contact and advice for union trustees.

- All TUC press releases can be found at www.tuc.org.uk

- Register for the TUC's press extranet: a service exclusive to journalists wanting to access pre-embargo releases and reports from the TUC. Visit www.tuc.org.uk/pressextranet

Contacts:

Media enquiries:
Liz Chinchen T: 020 7467 1248 M: 07778 158175 E: media@tuc.org.uk
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk
Elly Gibson T: 020 7467 1337 M: 07900 910624 E: egibson@tuc.org.uk

Press release (800 words) issued 16 Nov 2010