BRITISH pension schemes with more than £50bn in assets have sharply criticised a call by other major institutional investors for annual re-election of all directors at listed UK companies.
BT Pension scheme fund manager Hermes, and the universities pension fund USS – which manages £21.7bn in assets – said a move to put the entire board up for a vote at each annual meeting would be short-termist and distracting.
Last week, Norges Bank Investment Management, which holds 1.75 per cent of UK stocks, said a move to annual re-elections would bring “proper accountability”.
Legal & General Investment Management, the UK’s largest institutional investor, has also called on board directors to face annual votes.
“Annual re-elections are potentially distracting to the board, (and) create instability and additional work for the shareholders without any material benefit. So it’s not a good idea,” said Colin Melvin, chief executive of Hermes Equity Ownership Services.
Hermes EOS is part of the London-based fund firm which manages the BT pension fund’s more than £30bn in assets.
Melvin noted that unlike in the US, shareholders in the UK can convene an extraordinary meeting to oust a director if they have the support of other investors.
Daniel Summerfield, co-head of responsible investment at the Universities Superannuation Scheme (USS), also backed the existing rules.
“We believe an annual re-election could engender a short term outlook amongst both shareholders and directors,” Summerfield said.