The role of proxy advisers

Last year’s AGM season saw some of Australia’s largest companies receive a ‘strike’ against their remuneration reports. These events reignited debate on the voting influence and practices of proxy advisory firms.

Some prominent business leaders, professional advisers and governance commentators have been vocal in criticising proxy advisers for:

  • Neglecting to properly engage with boards, especially prior to making negative voting recommendations;
  • Failing to undertake an in-depth analysis when forming recommendations, and
  • Adopting an inflexible ‘tick-the-box’ approach to the governance arrangements of companies.

The lack of any obligation on proxy advisers to disclose any potential or actual conflicts of interests and the policies in place to manage such conflicts is another commonly cited issue of concern with these service providers.

While the AICD recognises and respects the role of proxy advisers, we have previously expressed concerns that this influential group operates without some form of code of conduct or self-regulatory mechanisms.

We are continuing our research and advocacy work on these important issues, with a view to finalising our policy position shortly.

If you have had experience with such issues and would like to share them with the AICD, we encourage you to contact Lysarne Pelling (Senior Policy Adviser) by 26 April 2017, on (02) 8248 2708 or lpelling@aicd.com.au.