Strength
in numbers
The influenceofactivistinvestorsis ontherise
A
ustralianinvestorshavea lot
tothankvocalshareholder
activistsfor.Activistsplay
a crucialroleinshininga
spotlightonpoorcorporate
behaviourthatcouldbedampeningdownthe
share price.Bypersuadingshareholdersto join
in a proxyfight,activistscanforcecompanies
to cut undeservingdirectorandmanager
remuneration,explaintheirenvironmental
policy, broadenthediversityontheboardand
addressotherhigh-profileissues.
Activistshaveammunitionsuchasthe
two-strikesrule,andwhentheymobilise
and pool5%oflistedsharestheycanforce
companiestomakechangesthatimprove
shareholdervalueandboosttheshareprice.PLANYOURSTRATEGY
If you holdshares,eitherdirectlyorthrough
your self-managedsuperannuationfund,
there arewaystoflexyourinvestormuscle.
With the annual general meeting season on
the horizon, from September to the end of
November, there is no better time to plan
your strategy and make your vote count.
“Annual meetings are the retail investors’
forum, where they get to eyeball the directors
and ask the board questions,” explains Judith
Fox, CEO of the Australian Shareholders’
Association (ASA). Retail share investors
have a view that their vote doesn’t count
but she insists it does, particularly when it is
aggregated with those of other small investors.JOIN THE COMMUNITY
The ASA, founded in 1960 for individual
investors, has 5000 paid memberships anda totalof14,000engagedinvestorswhocan
pooltheirvotesto putpressureonbadcompanies
toimprovetheircorporatebehaviour.The
ASAmonitorsaround 200 ASXcompanies
andpublishesitsvotingintentionsonthem
intheweeksleadinguptotheAGMseason.
Themonitorsareusuallyretiredexecutives
orpeoplewhohaveworkedintheindustry.
“Investorsarenotalonein thesharemarket.
TheASAoffersa communityofinvestors,”
saysFox.“Wedon’thavetheweightof capital
of institutionalinvestors,butwecanaggregate
votesandmakeeveryvotecount.”BETTEROUTCOMES
Institutionalinvestors,suchas thebigindustry
superannuationfunds,backupAustralian
retailshareholderactivists.Theyarehighly
engagedinkeepinganeyeonthecorporate
behaviourof Australianlistedcompaniesaswellasoverseascompaniesto achieve
a betteroutcomeforfundmembers.
Bigsuperfundsemploya numberof
specialistproxyadvisergroups,suchas
theAustralianCouncilof Superannuation
Investors(ACSI),whichdrivesstrong
environmental,socialandgovernance
(ESG)behaviourincompanies.ACSIhas
38 bigsuperfundmembersthatmanage
$2.2trillion in assets, or around 10% of every
S&P/ASX 200 company.
Louise Davidson, chief executive of
ACSI, says members believe ESG risks
and opportunities have a material impact
on their investments. For example, S&P/ASX
200 companies now have boards that
are 30% female, which Davidson
says is a milestone that is the
culmination of many years
of work by ACSI and othersSTORY SUSA N H E LYSHARES ACTIVISM
SUPER FUNDS HAVE THEIR SAY
If you would like to vote but don’t own any direct shares, check to see what your
superannuation fund does with its Australian and global shares.
Some large super funds, such as HESTA, actively vote on a range of issues and report
back to members in detail. For example, HESTA voted on 1405 resolutions at 273 company
meetings in 2018.
HESTA and other super funds employ specialist proxy adviser firms, such as ACSI, to dig
deep with companies. They also employ other ESG specialists: Regnan for Australian shares;
Hermes EOS for international shares and; WDI, which specifically looks at how the top 500
global companies manage workers in their direct operations and supply chains.
HESTA takes a stand on companies’ independence, board diversity, executive pay,
voting rights of shareholders, appointment of auditors, conflicts of interest, takeovers and
acquisitions as well as transparency on environmental and social issues.
The super fund opposed 99 remuneration resolutions in 2018 while voting in favour of 459.