Proxy adviser
Voting rights advisors advise shareholders on exercising their voting rights at general meetings . They exercise a similar activity to the protection of shareholders (e.g. German Association for Protection of Securities Ownership or Protection Association of Investors ), but their activities are not geared towards small shareholders, but towards institutional investors . In the English-speaking world, the terms proxy advisor or proxy firm are common.
background
Institutional investors such as fund companies , hedge funds , pension funds , insurance companies and banks are sometimes involved in more than a thousand public companies. It is therefore difficult for you to follow the development of the individual stock corporation, especially when it comes to foreign investments from the investor's point of view. For this reason, proxy advisors are hired as professional financial analysts to observe the stock corporations and to make recommendations for the general meetings on votes, e.g. B. via corporate actions, the discharge of management and supervisory boards or profit distributions. Voting advisors evaluate the publications of the stock corporations and use further capital market information. Companies without an influential major shareholder are particularly affected. Voting advisors have voting guidelines whose requirements are e.g. In some cases they are higher than those of the German Corporate Governance Code .
criticism
It is criticized that large voting rights advisory companies such as the US-American International Shareholder Service (ISS) and Glass Lewis at general meetings z. Sometimes influencing 30-40% of the votes without being involved in the company. In contrast, representatives of proxy advisors point out that shareholders often have their own guidelines and therefore do not necessarily vote uniformly even when the same proxy adviser is advised.
ISS employed 1,800 people in 2019, the number of employees has more than doubled since 2014. With offices in 30 countries, it now covers 44,000 shareholder meetings for 2,000 institutional customers per year. It is unclear whether qualified advice is possible with this volume. Therefore, many of the consultants' judgments would be very sweeping. In addition, proxy advisors would also advise companies through subsidiaries for which they issue voting recommendations. The market concentration is also high, with ISS alone having a market share of 60% in the USA and Europe.
Regulations
In the course of the implementation of the Shareholder Rights Directive (2007/36 / EC), Section 134d of the German Stock Corporation Act was introduced, which regulates the disclosure obligations of voting rights advisors. According to this, voting rights advisors have to declare annually that they have complied with the requirements of a code of conduct or why not in which points. Furthermore, they must u. a. Provide information on their sources of information, their working methods and the qualifications of the employees involved. Customers must be informed immediately about possible conflicts of interest and countermeasures introduced.
There are also efforts in the USA to regulate the work of proxy advisors.
The Best Practices Principles Group (BPPG) - an association of several proxy advisors relevant to the European market (including ISS, Glass Lewis) published a revised version of its Best Practice Principles for Providers of Shareholder Voting Research & Analysis on July 22, 2019.
Individual evidence
- ↑ www.focus.de: Proxy Voting Advisor - The New Power Factor , May 30, 2018, accessed June 13, 2020
- ↑ www.wiwo.de: Alliance against lush bonuses , May 19, 2017, accessed on June 13, 2020
- ↑ www.tagesschau.de: The new whisperers of the shareholders , from May 23, 2019, accessed on June 13, 2020
- ↑ www.gesetze-im-internet.de: Section 134d AktG , accessed on June 13, 2020
- ↑ www.nzz.ch: The power of proxy advisors arouses criticism , November 18, 2018, accessed on June 13, 2020
- ↑ beck.de: Best Practice Principles for Voting Rights Advisors 2019 published , August 19, 2019, accessed on June 13, 2020