LGIM votes against one in five UK companies


Legal & General Investment Management voted against one in five UK companies in 2015, with half of those votes cast against remuneration policies.

Cyber security, climate change, corporate tax and diversity are also becoming increasing areas of concern for the company, according to its 2015 Corporate Governance report.

In total LGIM attended 545 company meetings last year, with 45 per cent held in companies outside the UK.

The proportion of companies voted against was even higher outside the UK, with LGIM voting against 75 per cent of resolutions in Japan and 65 per cent in Europe. In the US it voted against 56 per cent of resolutions and in emerging markets it voted against 62 per cent of resolutions.

Just last week the company voted against BP’s pay package proposals, arguing there was poor alignment between shareholder returns and executive remuneration.

LGIM said it had been warning companies against complex pay structures since 2013, and in that period had seen the proportion of companies with more than one incentive plan drop from 43 per cent to 18 per cent.

Other companies it has voted against on the issue include Man Group, AstraZeneca and Sky. It also met with all major UK banks in 2015 to discuss remuneration policies.

Sacha Sadan, director of corporate governance at LGIM, says good corporate governance impacts investors across asset classes.

“Active ownership of the companies in which we invest is at the heart of what we do as an asset manager.  We believe that good corporate governance adds value, while poor governance can destroy it.”

The report expressed concern about the lack of transparent corporate tax practices companies used and said best practice involved country-by-country reporting.

When it came to cyber security, LGIM called for companies to complete external cyber audits, to identify weaknesses in the company.

LGIM also said it supported the outcomes from the Paris climate conference in 2015 and was committed to working with companies to limit global warming rises to less than 2 degrees Celsius.

The company said it pushed for board diversity and pointed out that the proportion of companies meeting targets for a quarter of female boards members more than doubled from 12.5 per cent five years ago to 26.1 per cent today.

Sadan added: “Despite remuneration still being a key concern, I believe that corporate governance has evolved from just voting on pay related issues.  Our report shows the issues on which we engage with companies ranges widely from climate change to cyber-security and continues to evolve.”