Well done M&G - it was one of the few institutional investors that didn't tick the box last week to approve Andrew Moss's re-election as a director of Aviva.
The fund management division of Prudential was in a substantial minority. Nine out of 10 votes were cast in favour of his retention, even though the chief executive's standing among fund managers has been rather like the share price of his company for the past five years – it's been falling.
Two conclusions can be drawn. First, most shareholders are using advisory votes on pay as a opportunity to express dissatisfaction with boards that don't deliver the goods for shareholders. As argued here last week, we are not witnessing an across-the-board rebellion against high pay; it's bosses who don't also enrich their investors who are the prime target.
Second, it follows that most institutional investors remain cowardly when the issues become personal. What is this obsession with sending roundabout messages about the boardroom lineup via non-binding votes on pay? If Aviva's owners didn't want Moss to be their chief executive, why not just say so by ticking the "against" box or, as M&G did, by registering an active abstention?
A charitable reading would conclude that the 'system' works since Moss deciphered the smoke signals and offered his resignation. And at Trinity Mirror, Sly Bailey jumped before the annual meeting. But the process still feels unsatisfactory. Given the chance to remove Moss, most shareholders ducked out. One can – almost – feel some sympathy for embattled chairmen trying to decode shareholders' wishes. Are the owners unhappy with the chief executive or just the share price ?
Fund managers' explanation of their preference for coded messages usually runs like this: we can't run the risk of kicking out a chief executive via a binding vote on re-election because it would be irresponsible to leave a company rudderless; thus it's better to signal unhappiness via the advisory vote on pay and trust the chairman to do the dirty work.
That is a feeble argument. Aviva is hardly rudderless today since the incoming chairman, John McFarlane, has stepped up to do the chief executive's job himself until he appoints a permanent replacement; the share price has risen strongly on the news. Most companies have somebody they can turn to in a crisis, just as Lloyds had when António Horta-Osório took time off to recover from exhaustion. There a very few companies where the sudden removal of one individual would cause the roof to fall in.
So this 'shareholder spring' requires a note of caution. Yes, it's very encouraging that undeserved pay is in the spotlight. Yes, we should cheer when underperfoming bosses are held to greater account – and the roundabout method is definitely better than silence. But it's a strange sort of uprising where most City fund managers, when it gets personal, are too timid to vote for what they say privately they want. As M&G has shown, it's really not hard.
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image: © Dominic Alves