The voting structure in almost two-thirds of Australian companies has changed from “show of hands” to poll voting, thanks to an initiative between the Australian Council of Superannuation Trustees (ACSI) and the US financial services company TIAA-CREF.
Show-of-hands voting gives each shareholder at the meeting one vote, irrespective of the number of shares they own. While permitted under Australian law, it leads to unequal treatment of shareholders – particularly those who hold significant shareholdings on behalf of their beneficiaries (such as super fund members), who generally lodge their votes by proxy in advance of the meeting.
The initiative contacted 38 of Australia’s largest companies who used show of hands during the 2014 voting season. Since it was launched, almost two-thirds of companies have improved practices in their 2015 shareholder meetings, compared to 2014, with most moving to poll voting for all resolutions.
In a statement, ACSI said this result demonstrates the power of global investor collaboration on corporate governance issues, and the willingness of progressive companies to respond quickly.
Louise Davidson, chief executive of ACSI, said in the longer term, polling should be a mandatory requirement enshrined in the Corporations Act.
“We’re seeing an increased interest by international investors in the corporate governance of Australian companies, and we are delighted to have worked with TIAA-CREF and the other participating investors in achieving this result,” Davidson said.
Across the broader market, there is a long-running trend towards poll voting.
In 2010 only around a quarter of ASX200 companies used it for all resolutions – today three quarters do. Among ASX100 companies, under 10 per cent still use show of hands.
Bess Joffe, TIAA-CREF’s head of stewardship and corporate governance, commended the companies that have responded positively to the investor engagement.
“TIAA-CREF believes shareholders in all global markets should have the right to vote in proportion to their economic stake and that each share of common stock should have one vote. This is especially important to institutional investors who hold significant shareholdings on behalf of their beneficiaries but might not be able to attend the AGM in person,” Joffe said.
“Voting by poll ensures that all votes are counted.”