Jai Baker – head of industry, Link
David Isaacs – associate director share plans, Link
For a general meeting event where paper proxy cards are issued, mainly to retail shareholders, on average only 5 per cent of the cards are returned with voting preferences -representing 21 per cent of the issued share capital.
On average, 53 per cent of issued share capital is voted in total on each resolution. So, it's safe to say that the majority of votes cast come from institutions and intermediaries holding shares on behalf of ultimate investors. These statistics are broadly the same when you look at participants in employee share plans voting at company meetings.
There could be several reasons for this:
Traditionally, financial education around employee plans has focused on savings, investment and taxation. These are all key to employees making decisions about participation.
However, if engagement is to be achieved, then we have to look at building on this and developing a greater understanding of ‘company business’ at general meetings, including what rights and powers employee investors have as share owners and how those rights are exercised.
'The complexities of savings, investment, taxation, debt, employment and pensions need to be tackled in the school environment'
I believe if we tackle these issues, then the transparency concerns would be less influential in the minds of employee voters, and the levels of engagement and voting would be substantially improved.
For too long, formal education about practical financial matters has been limited and now - more than ever - the complexities of savings, investment, taxation, debt, employment and pensions need to be tackled in the school environment and curriculum.
Institutional investors have a huge stewardship responsibility towards the long-term health of the companies they invest in. This is clearly shown in the new UK Stewardship Code 2020 which takes effect from 1 January 2020.
'Institutional investors need to understand the values of employee share plans for the long-term ’health‘ of organisations and their employees'
It sets high expectations and, in particular, the new code establishes a clear benchmark for stewardship as the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society. There is a strong focus on the activities and outcomes of stewardship - not just policy statements.
Institutional investors need to understand the values of employee share plans for the long-term ’health‘ of organisations and their employees.
My advice is:
You read Jai and David's previous interviews here:
Have you listened to our new Governance360 podcast yet?
You might be interested in our episode on share plan engagement...
Or find the whole series: