Activist battles largely take place between big asset managers and their proxy advisers. Is it time their retail investors got more of a say in what they do?
Already a subscriber?Two recent developments spotlight the increasingly influential role played by intermediaries in core aspects of our market – the campaign by proxy house CGI Glass Lewis against Woodside chairman Richard Goyder, and a pilot program launched by multinational mega-player BlackRock to boost shareholder voting power.
But outlier CGI Glass Lewis asserts that the Woodside board’s response to climate issues has been put before shareholders repeatedly over the last few years and, while there has been some engagement from the board, itThe argument is comprehensively rejected by Woodside, which contends that it has consulted extensively with shareholders and that its engagement is reflected in its updated plans, projects and climate-related reports.
Which brings us to the BlackRock pilot. If we look at the initiative through an Australian lens, we are introduced to a concept of “voting choice” that is somewhat revolutionary for shareholders who hold their interests in companies through fund managers. Over the past decade, the US has seen a massive rise in the level of investment in passively held funds and, as a consequence, greater scrutiny of the increased concentration of voting powers.
The 12-month pilot will expand the program by allowing eligible investors to select one of six third-party proxy voting policies. Once a voting policy is selected, it will be applied to the AGMs of companies held in the US Pilot Fund, based on investors’ proportional ownership of the fund. BlackRock says it will use the pilot to gauge investor interest and potentially expand the program further.
With the US congress still considering legislation introduced in 2022 that establishes guidelines for requiring index fund managers to implement pass-through voting, it is worth considering whether we start to move in the same direction in Australia.
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