The number of do-it-yourself investors on the Interactive Investor platform who voted on shareholder resolutions soared after the company automatically opted in to all of its clients in a voting and information service.
The change could embolden activists who have fought for greater investor participation in shareholder votes, including on pay, strategy and environmental, social and governance (ESG) issues.
The UK’s second-largest fund supermarket said it processed 48% more votes on shareholder resolutions in the first half of this year than a year earlier. However, the 134,000 votes still only represent 16% of the decisions his clients could have weighed in on.
The company said the increase in voting after switching all of its customers to the voting system last fall shows how the financial services industry could do more to encourage individual shareholders to exercise their power over corporate decisions. .
Previously, II customers had to register for the voting system.
Chief Executive Richard Wilson said the increased turnout has helped debunk the theory that do-it-yourself investors just don’t want to vote at company meetings.
“A lot of private investors want to vote, and there are more of them. Not all resolutions will generate interest, but some have impact, from climate goals, from executive pay to the fair treatment of workers,” did he declare.
Wilson said it’s important for companies to “remove unnecessary barriers to voting” and use technology solutions to give small shareholders a say.
Large institutional shareholders, such as asset managers and pension funds, already wield their influence as big business owners to shape corporate policy, and have become more militant in recent years on issues such as climate change, diversity and executive compensation.
On the other hand, many individuals do not vote on major decisions in the companies in which they are shareholders, put off by the often complex administrative formalities and the feeling that individual votes have little influence.
Consumer group Which? said this month that “many investors are effectively disenfranchised by investment platforms with a tediously complex voting process.”
Some investment providers like Interactive Investor have tried to make the process easier, using technology systems that make it easier for investors to view information and vote online. In the UK, politicians and the financial services industry are trying to stimulate retail investor participation in capital markets.
The proportion of eligible voters actually cast by II clients rose from just 6% in the first half of 2019 to 11% last year. This year’s 16% figure still shows that the vast majority of votes are not being used.
Last year, consultant Lang Cat praised the steps taken by Interactive Investor to encourage customers to vote. “Exercising shareholder rights by voting and attending general meetings is a crucial part of investment company ownership,” analyst Chris Bredin said at the time.
The two AGMs that attracted the most attention this year from II clients were Lloyds, which is facing controversy over executive pay, and oil major BP, which is under pressure because of the transition from fossil fuels.