Shareholder activism increasing

A long-term trend towards increased shareholder activism has emerged, according to Standard Life Investments’ 2013 Annual Review of Governance and Stewardship, as regulators and governmental authorities across the globe introduce new laws to strengthen corporate governance. 

The report observed an increased focus on asset owners and asset managers fulfilling their investor stewardship responsibilities in the face of new laws and regulations strengthening corporate governance. This was particularly the case regarding responsibilities relating to executive pay and audit issues and shareholders’ new rights to hold company boards accountable.   

The most striking example was the introduction in the United Kingdom of a binding vote on executive pay policy, which gives shareholders a right of veto, rather than just a right to advise, on boardroom pay, the report said. 

The increased assertiveness of regulators and governmental authorities - and their willingness to take a firm public position when business practices have fallen short of expectations and have been contrary to the public interest - has helped to underpin the efforts of shareholders to hold boards to account. 

Standard Life Investments head of governance and stewardship, Guy Jubb, said as the global landscape for governance and stewardship changed, it was mutually beneficial for companies and long term-investors to have a relationship based on accountability, engagement and trust. 

“Such a relationship enables us to act in the best interests of our clients by allowing us to work with company boards and hold them to account as and when appropriate. We believe that this serves to enhance the long-term value of our clients’ investments and to protect their interests when necessary,” said Jubb.