UK Activist Investors Lag Europe - but Are Catching Up
Aitken, Roger, The Independent (London, England)
Ahead of the annual general meeting (AGM) season, the National Association of Pension Funds warned big companies this week that they face another shareholder spring.
It wrote to the chairmen of all FTSE 100 and 250 companies warning them to clamp down on bonuses or face protests from investors.
Successful shareholder revolts last year led to the resignations of Andrew Moss at Aviva and Sly Bailey at Trinity Mirror.
To exercise shareholder rights at a company you need to hold at least one share, and you can then attend the AGM and ask questions directly of the senior management.
Shareholder activists no longer need to cover their faces in war paint or protest loudly outside the AGM to make their point. Instead investors can let shareholder associations do the job for them.
But can this new shareholder activism, consisting of dialogue and formal shareholder proposals, work to make companies stay on track and behave?
Across Europe shareholder associations have seen mixed fortunes, but Britain is certainly lagging behind, according to Roger Lawson, the chairman of the UK Individual Shareholders Society (ShareSoc).
He says there are a "number of reasons" why associations in Britain have not blossomed to the same extent as in continental Europe. "Often it tends to be stimulated by specific issues such as excessive pay, which has been a hot topic of late," Mr Lawson says.
European success stories include the Swedish Shareholder Association and its counterpart in Denmark which have some 70,000 and 20,000 members respectively. That is far larger than ShareSoc, spun out of the UK Shareholder Association two years ago, which has a membership hovering at just over 2,500.
And the Scandinavian societies are not alone. Deutsche Schutzvereinigung fr Wertpapierbesitz, a German society formed in 1947, has about 25,000 members today.
More than anything else the disparity between the UK and the rest of Europe can be attributed to a "cultural problem", according to Mr Lawson. "There is an inherent reluctance among the English to complain, tied to a faith that directors are seen as doing the right thing by their companies," he says.
"It's also generally viewed as bad form to challenge the directors or attack them for incompetence. And nobody likes to vote against any resolutions."
However, it sometimes comes down to the efforts of shareholders themselves to force issues. Aside from direct action, the shareholder activism model includes individuals signing up to shareholder societies to leverage their collective clout. …