It’s time the asset management industry held boards to account for not listening to what fund managers are saying over corporate governance issues.
At the Investment Management Association’s annual general meeting dinner this week, chairman Robert Jenkins said it was the responsibility of a company’s board to listen and act on recommendations on good governance from fund managers that invest in their companies.
Putting it bluntly, boards are likely to ignore any efforts of investor engagement unless they think there will be consequences. Voting down a director is likely to do more good for governance than any code revisions, he reckons.
Such tough words came the evening before the association brought out its survey on fund manager engagement.
The report showed no lack of commitment to engagement with companies over their transparency and strategy, with some contentious issues emerging. No less than 21 asset managers held 59 meetings with the Royal Bank of Scotland about its rights issue in 2008, while more than a dozen had 28 meetings with Bradford & Bingley, including 17 with the chairman about its financing, last year.
Engaging with investors over a strategy challenge might have helped avoid a small part of the financial crisis. Listening would be a good start next time round.