Super funds increase AGM votes against directors

Super funds increased the instances they voted against a director by 7% in 2019, according to an annual general meeting (AGM) report by Link Group.

In its AGM Snapshot 2019, Link analysed the results of 1,800 meetings for voting patterns.

It said director scrutiny remained an issue with “directors under the microscope more than in previous years’ over issues such as director independence, over-boarding and governance and risk failures”.

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“Director scrutiny continued in 2019, with directors under the microscope more than in previous years. More resolutions received votes against director elections/re-elections when compared to 2018. Areas of concern related to directors were the independence of directors and the composition of boards as a result, overboarding and material governance and risk failures,” Link said.

“[Some] 47 director elections received more than 20% against votes. Overall we saw super funds increase they voted against a director nomination by 7%.”

Link said it had seen an increase was particularly prevalent at companies which had reported poor financial results or governance issues and even if a director’ other entities were struggling.

“The recent AGM season has also shown that investors are willing to extend their ‘against’ votes to organisations which are not necessarily the target of the ‘against’ vote – in that if directors are also directors of entities which are in the spotlight for the wrong reasons, some investors have shown a willingness to vote against a director’s re-election at entities which are not experiencing issues.

“There were a number of protest votes against director re-elections, specifically where the director was long-standing, part of the board in place at the time of the poor performance and potentially had the ability to influence and approve certain outcomes or at least should have been aware of certain issues during that time.”

They were also requesting more information from directors before they would re-elect them, a change from previous times when re-election was usually automatic and received unanimous votes.

“We observed at a number of meetings, investors requesting directors subject to re-election address the meeting and outline the benefits and attributes they would bring to the board composition as well as an increase of questions asked by investors in regards to director re-elections.”

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