F&C highlights corporate governance failures

F&C says outrage at excessive risk-taking in the banking system means investors are increasingly scrutinising corporate governance issues.

The asset management group signalled its concern at the launch of its annual Responsible Investment Report.

This highlights ongoing corporate governance failings in the financial sector, such as a failure to link pay to genuine long-term performance, and weaknesses in risk management and board oversight.

According to the report, F&C exercised its voting rights on 29,165 proposals across 2,553 companies in 59 countries.

It also reveals shifts in F&C's voting record in individual countries. This included a rise in votes against management in the US, from 16% in 2007 to 24% in 2008, because of factors such as a sharp uptick in resolutions filed by minority shareholders, who tend to be critical of management.

Karina Litvack, head of governance and sustainable investment at F&C, says: "We believe that a failure in governance lies at the heart of the banking crisis. The events of the last few months have confirmed that the soaring pay packages for top bank executives were driven by extraordinary risk-taking rather than real, sustainable profits. Investors can be part of the solution, by spotting red flags and using their influence as shareholders to press for better governance practices."

Categories: Equities

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