Will rise of passives help or hinder holding management to account?

Recent calls for tighter remuneration rules

Shareholder engagement has become a key industry issue, with new Prime Minister Theresa May among those calling for tighter rules around executive pay and greater levels of accountability for top-level management.

However, the rise of passive investments may be a complicating factor, as the proportion of company shares owned through trackers continues to grow. The issue was brought to the fore by the recent move by Deutsche Boerse to lower the level of approvals it needs from shareholders for the takeover of the London Stock Exchange from 75% to 60%. It said this was due to the fact up to 15% of its stock is owned through index funds, which are only technically capable of tendering their shares after the minimum acceptance threshold has been reached. With the proportion of assets held in pas...