Britain’s big public companies will be questioned by asset managers over their track record on diversity, excessive pension payouts to bosses, and poor quality audit during the annual shareholder meetings over the coming weeks.
It is the first time that the Investment Association (IA) has specified what changes it wants to see in the annual general meeting (AGM) season. Among the companies making up the IA’s Corporate Governance and Engagement Committee are Britain’s biggest asset manager Legal & General Investment Management, part of insurer Legal & General, and Schroders.
The IA said that if no action is taken before each company’s AGM, it will warn members through its International Voting Information Service (IVIS), using colour codes blue, amber and red to signify the seriousness of the issue.
Boardroom diversity is still at the top of many asset managers’ list of concerns to ensure women make up at least a third of boards and leadership teams at Financial Times Stock Exchange (FTSE) companies by 2020.
Last week the IA wrote to the boards of 69 FTSE 350 companies which were falling behind in their diversity efforts.
Another pressing issue is the big pension payouts received by some company bosses after the UK’s Corporate Governance Code in 2018 ruled that they should be aligned with the pension contributions given to the majority of the workforce.
The IA said its members would also push for companies’ audit committees to show more effectively how they ensured a quality audit was undertaken. This follows a series of high-profile accounting and audit blunders that was uncovered most recently in Metro Bank.
Additionally, companies will be required to give a view on their viability for a longer period than the current three-year time frame.