The Corporate Counsel - a key source of information and analysis on legal issues impacting corporate America - says 64 US companies have been voted down on executive remuneration in so-called ‘say-on-pay’ votes so far this year. This compares with 61 at the same point in 2012 and, according to Pensions Investment Research Consultants (Pirc), just two in the UK.
The set-up for retail shareholders in the UK means even having a voice in the running of companies you are invested in is not guaranteed. Only ‘members’ of the company listed on the share register are ensured of the right to attend general meetings and vote on resolutions and only those who hold their shares in paper certificate form or through Crest personal membership will be listed on the register; Crest being the depository for the UK’s electronic share holdings.
If you instead hold shares in the nominee account of a stockbroker, as an increasing number of investors do (see ‘Nominee growth’, right) then you are not on the share register (the broker is instead) and nor are you a member, you are simply a beneficial owner of the shares. As such your presence at general meetings is not assured and you will not necessarily be able to vote.
Some stockbrokers, including Brewin Dolphin, Killik & Co and TD Waterhouse, will allow you to exercise your vote by issuing a ‘letter of representation’ which enables you to attend any meetings and vote as if you were a member of the company. Or they may vote on your behalf through a proxy form sent to the company. Another option is to buy a small number of shares in certificated form or in a personal Crest account in order to secure a place on the register.
At present though, many investors in nominee accounts are essentially disenfranchised and it is worth noting Individual Saving Accounts and Self-invested Personal Pensions have to be in nominees. Both ShareSoc and the UK Shareholders’ Association (UKSA) are active campaigners for new rules which would protect the rights of nominee shareholders.
In its manifesto UKSA says: ‘No company or commercial nominee account provider should be allowed to make any distinction between the rights of those holding shares in certificated form, private Crest accounts or nominee accounts, whether or not they have internet access, thus removing voting rights from those who provide nominee accounts.’
Nominee growth
250%
Is, according to wealth management analyst ComPeer, the increase in the number of execution-only nominee accounts between 2003 and 2012 (from one million to 3.5 million).
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