LGIM corporate governance campaigns heat up

Corporate governanceLegal & General Investment Management has revealed it voted against 18% of all UK company resolutions last year, with around half of the ‘no’ votes relating to pay.

The firm’s latest corporate governance report indicates LGIM attended 545 company meetings in 2015, with 45% of these meetings held with companies based outside of the UK.

Of the 188 adverse votes cast by LGIM in the UK last year, 93 related to remuneration. Last week, the firm voted against BP’s executive pay proposals because it felt there was poor alignment between long-term shareholder returns and planned remuneration levels.

Earlier this year, LGIM made headlines when it took the unusual step of publicising its long-held concerns about UK sporting goods retailer Sports Direct’s corporate governance policies.

In both 2014 and 2015, the firm voted against the re-election of chairman Mike Ashley, Newcastle United football club’s billionaire owner. Under his leadership, 75% of the company’s UK workforce is employed via controversial ‘zero hours’ contracts, which do not offer staff minimum working hours or other standard employment rights.

LGIM’s determined approach in this regard seems to have borne some fruit – since warning companies in 2013 that it would vote against multiple and complex pay schemes, the number of companies having more than one incentive plan is down from 43% three years ago to 18% today. The firm expects this downward trend to continue in future.

Another major campaigning point has been board diversity. Five years ago, 12.5% of companies met the target for a quarter of female board members. Today that figure is 26.1%.

The report states LGIM is also concerned about a lack of transparency in corporation tax practices, and would like to see more companies introduce external audits for cyber security.

Legal & General Investment Management manages assets of £122.4 billion (€157.2 billion) as of December 31, 2015.

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