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UK Banks: Votes below FTSE 100 average

16 February 2009

Sarah Wilson

EU regulation

Manifest has recently published its findings on voting at UK shareholder meetings in 2008 and this prompted suggestions that we should make a submission to UK's Treasury Select Committee on the Banking Crisis.

The Committee is still taking evidence and we were asked to address the issue of voting at UK Bank AGMs to see what dissent, if any, could be detected. This is in the context of the Committee's desire to look at 'The responsibilities of shareholders in ensuring financial institutions are managed in their own interests'.

The points that the research show are that:

  • There is no marked increase in voting at the Banks, except in the most recent past which relates to isolated resolutions at one company
  • Voting at the Banks in some circumstances is below average compared to the FTSE100
  • There is no evidence of elevated or widespread shareholder dissent at share-based remuneration in the Banks
  • There is no evidence of the alleged widespread dislike of certain Bank directors as measured by votes against or abstain on director election

The evidence therefore contradicts statements made that those shareholders who had not sold their shares in 2005 would have used their vote instead of exit. While voting might be considered by some as a 'blunt tool', of all the strategies available to shareholders it has the most legal force.

The Evening Standard has been quick to pick up this potential failure of the governance process. No doubt we can expect to see the Government introducing new legislation in light of the lessons learned. Let's just hope that this doesn't lead to a culture of compliance-driven box ticking.

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