AIRA and the Group of 100 (g100) repeat their call that listed entities be able to fact check data held by proxy advisors
94% of respondents said they want to fact check the data before release
Companies want constructive engagement with proxy advisors to ensure shareholders receive best possible advice
Urgent need for a voluntary code of practice to improve engagement and proxy reports
Leading ASX listed corporations revealed today the large number
of factual errors being made in proxy advisor reports in a survey
released by the Australasian Investor Relations Association (AIRA).
These reports can critically influence votes cast by major institutional
A significant number of ASX200 companies that responded to the
survey on proxy advisors and engagement practices identified one or more
factual errors in the most recent proxy reports published on their
83% of respondents have a 30 June financial year end, so most of
those errors occurred in proxy reports related to the current AGM
Each of the four leading proxy advisory firms – Institutional
Shareholder Services (ISS), CGI Glass Lewis, Ownership Matters and The
Australian Council of Superannuation Investors (ASCI) - were named by
respondents as making important mistakes.
The survey received responses from 52 listed companies, 46 of
which were in the ASX200. A significant one-third of those ASX200
respondents reported errors in reports written by proxy advisors on
AIRA’s chief executive, Mr Ian Matheson, said today: “This is the
first survey to quantify the extent of the problem that many of our
members have been complaining about in their interactions with proxy
advisors. It shows that one-third of the 52 respondents complained of
one or more significant mistakes.
“Proxy advisors play an extremely important role in critically
analysing proposals put to shareholders by companies. Companies
therefore want to ensure that the analysis is factually correct before
it goes out. This is not about differences on matters of policy,” Mr
“Companies want to work with proxy advisors in a constructive way
to ensure that shareholders are getting the best possible advice on
voting matters. It should be in al parties’ interests and, indeed, for
the integrity of the capital markets, for proxy reports to be factually
AIRA recently called on all parties to adopt its initiative for a
voluntary Code of Engagement to improve interaction between proxy
advisors and listed companies.
Group of 100 (G100) CEO, Mr Stephen
Woodhill said, “we remain committed to supporting the valuable role
proxy advisors play but our members are increasingly frustrated by
matters like those raised in the AIRA research and we continue to seek a
voluntary code of conduct for proxy advisors to bring stronger
alignment and consistency.”
The survey also gives details of the specific areas where the errors are being made in proxy reports.
Respondents cited a number of examples where these factual errors
were made, including for misunderstanding long-term incentives in
remuneration reports; in business portfolio changes; their understanding
of normalised profit frameworks; incorrect year-on-year comparisons of
key financial metrics and incorrect details of shareholder approvals
already in place.
Comments made by respondents outlined some other important issues.
They included a difficulty to arrange meetings with one or more
of the proxy advisors that cover their companies; evidence of errors in
reports, but no corrections made even when those errors were drawn to
the advisor’s attention; and that proxy advisors in some cases were
encroaching into areas traditionally covered in stockbroker reports,
indicating that some level of regulation may be required.
Mr Matheson said proxy advisors needed to heed the concern of
major listed companies and allow them to check the factual accuracy of
their data before publication. This should now be possible given that
most major companies release their annual reports including the
remuneration report at the same earlier time as their full year results.
Glass Lewis was the only proxy advisor identified in the survey as
correcting any reports, while the other three advisors did not correct
any. When asked whether they would like to correct any factual errors
prior to publication, 94% of companies said yes.
“AIRA would like to see a re-examination by the Australian
Securities and Investments Commission to determine whether the carve-out
that proxy advisors currently have in their AFSL licenses for general
proxy advice is appropriate.
“All proxy advisors have AFSL licenses, but that only covers
financial advice and not the vast majority of the other advice on
resolutions at AGMs that they generate. It might be time for that to
Other Key Findings:
• The vast majority of respondents had one or two meetings with each proxy advisor ahead of their most recent AGM;
• September was the busiest month for meetings with proxy advisors, followed by August, October then June;
• 38 factual errors were noted by respondents, but only two had been corrected when reports were issued;
• Asked if respondents would like to correct any factual errors, 94% said yes;
• The representatives of companies most commonly attending those meetings were the Chairman, IRO and/or a Board Committee Chair.
For more information contact:
Ian Matheson, Chief Executive Officer, AIRA
T: +61 2 9872 9100 M: 0419 444 731 E: [email protected]
Stephen Woodhill, Chief Executive Officer, Group of 100
T: +61 3 9606 9661 M: 0413 318 455 E: [email protected]
Australasian Investor Relations Association (AIRA) was established in
2001 to advance the awareness of and best practice in investor relations
in Australia and New Zealand and thereby improve the relationship
between listed entities and the investment community. The Association's
160 corporate members now represent over A$1.2 trillion of market
capitalisation, over 80% of the total market capitalisation of companies
listed on ASX.
About The G100
The G100 is
Australia’s peak body representing Chief Financial Officers and senior
finance executives from the public and private sectors. The G100
contributes to the development and delivery of policy as it applies to
business regulation, governance, financial reporting, taxation and
capital markets. It advances the interests of Australian business
encouraging conditions that allow private and public enterprises to grow
and compete in today’s highly competitive environment. Members, and the
major enterprises they represent, come from publicly listed and private
companies, international companies working in Australia, as well
government departments and agencies.