Banking Crisis - Treasury Contents


Memorandum from Manifest Information Services Ltd

INTRODUCTION

  1.  Manifest welcomes the opportunity to submit evidence to the Committee in connection with its inquiry into the lessons that can be learned from the banking crisis.

  2.  Notwithstanding the fact that we are submitting our evidence past the published deadline, given the nature of some of the evidence presented to the Committee in respect of the Role of Institutional Shareholders, we hope that the Committee will not be averse to taking supplementary, factual findings to support their deliberations.

BACKGROUND

  3.  Manifest Information Services Ltd was formed in December 1995 to address the operational problems faced by investors wishing to take an active role in the oversight of their investments through the AGM process. Manifest is not an NGO, trade association or lobby organisation and receives no funding support from political parties or special interest groups; our entire turnover derives from subscription sales.

  4.  Our mission is to provide independent and impartial analysis of shareholder resolutions and to facilitate shareholder voting through our proprietary electronic voting platform. Our customers vary in type and size but include insurance companies, sovereign wealth funds, local government pension schemes as well as a variety of consultants, advisors and academics. Our clients are mostly UK and continental Europe based. Through our partnership with a similar organisation in Washington DC, ProxyGovernance Inc., we also service North American investors.

  5.  Our coverage since 1996 has been the UK Main Market and AIM and for the past 5 years we have extended our scope and coverage to include Continental Europe, Oceania and certain global "Blue Chip" indexes.

  6.  In addition to our analysis of routine resolutions, Manifest maintains a database of, inter alia, executive remuneration data, director biographies and board composition data, all of which is designed to enable investors to make informed judgements on their voting decisions. We have also been honoured to be able to work with the Department of Business, Enterprise and Regulatory Reform, the Financial Reporting Council and the European Commission in the provision of data and analysis on a variety of governance reform issues.

  7.  A matter of relevance to the Committee is the fact that since our first proxy season of 1996, Manifest has collected the voting results from shareholder meetings in order to assess overall voting levels as well as to be able to analyse connections between governance issues and voting outcomes. Manifest is uniquely qualified to be able to present these findings to the Committee as this data set represents the largest, most comprehensive and uninterrupted database of its kind. What makes this data especially valuable for the members of the Committee is that historically there has been no legal requirement for the disclosure of this data; although this issue is being addressed through the EU's Shareholder Rights Directive for which BERR has recently closed its consultation.

  8.  Using the voting results that we have collected, we wish to present the Committee with our findings on the voting patterns in the Banks before and during the current turbulence. In doing so we seek to be able to address, in part, the Committee's question relating to: `The responsibilities of shareholders in ensuring financial institutions are managed in their own interests.'

RATIONALE

  9.  Having read the initial call for evidence together with the subsequent written and oral evidence submitted to the Committee, we believe that it is necessary to put some of the statements and answers into context, particularly those relating to shareholder engagement and activism.

  10.  Shareholders have a number of property rights most notably the right to transfer their shares (buy and sell) as well voting on various issues at general meetings. While selling securities can indeed be used as a disciplining mechanism, it is not without its costs. There is not just the spread and commission to consider there is also the wider market impact. Selling can also be a very blunt tool in terms of flagging issues to management. Whereas the more developed governance teams will notify a company of their intention to vote against or abstain, any notification of a buy or sell intention would negatively impact the institutions buy or sell strategy.

  11.  Asset disposal also does not have a legal impact on a company in the same way as the shareholder vote. The UK is extremely fortunate in that shareholder votes can have a binding effect; this is particularly helpful on issues such as the appointment or removal of directors and dismissal of auditors. In some jurisdictions, such as the US, votes are not mostly advisory. US shareholders are often very surprised at the relatively low levels of dissent votes against management and shareholder-sponsored resolutions. In North America all too often it falls to the Class Action lawyer to find a legal resolution to shareholders concerns because the shareholder vote is that much weaker.

  12.  Voting has recently been described as a "fairly blunt tool" in the governance tool box. It is, nevertheless, the ultimate sanction against management for misdeeds. Case law clearly shows that the Courts are loath to intervene in shareholder disputes until the full range of shareholder remedies has been exhausted. These would include, for example, the removal of directors, the proposal of shareholder sponsored resolutions, the calling of an Extraordinary General Meeting (EGM) or a combination of all of the above.

  13.  Putting it politely, there may be a cultural or societal norm which tends to lead to an avoidance of direct conflict through the use of voting dissent. Or to be blunt, there are widespread concerns that too much of the City's business takes place behind closed doors for comfort. If shareholders can demand transparency and accountability from their investee companies, is it too much t0 ask for that process to be a two-way street?

  14.  Turning to the Investment Management Association's written evidence, paragraph 107 stated that a number of their members had begun to exit the banking sector `as long ago as 2005'. In paragraph 108 the paper states that investors not in a position to sell would have had no alternative but to raise their concerns and `ultimately vote against management'.

  15.  We therefore felt that it was important to test this proposition by measuring actual voting outcomes. It is not our position to argue which should come first, the `engagement' or the `voting' but whichever strategy was being deployed, in theory the results should show one of two outcomes. If it were true that non-selling, captive, shareholders expressed their concerns by withholding voting support there should be a higher than average level of dissent at the Bank meetings; alternatively if dissenting vote levels remained constant then that would show that those shareholders have supported management.

METHODOLOGY

  16.  We created a series of tests with the objective of comparing voting trends at Bank meetings compared to the meetings of all FTSE100 constituent companies. The earliest data available to us is from 1996. Although there has not always been 100% disclosure by every constituent company over this period, since 1998 the sample is statistically significant and response rates to our requests have consistently been in the mid to high 90% range with 100% in later years. Should the committee wish to access the underlying data for further inspection we would be happy to share our findings.

  17.  Every UK incorporated company is now legally obliged to hold an Annual General Meeting (AGM) within 6 months of its year end.[181] The AGM contains a number of resolutions for shareholders to consider, on average 12 per meeting. Typically these resolutions will be election of directors, appointment of auditors and various technical items relating to share issues, articles of association. Since the introduction of "The Directors' Remuneration Report Regulations 2002" shareholders have also been able to voice their concerns on overall compensation policy in addition to specific remuneration elements. This particular vote is non-binding, as is the adoption of the report and accounts, if it is presented. Unlike much of the rest of Europe, the UK does not require shareholders to approve the acts of management through a `Discharge Resolution'. Some may argue that this is the UK's loss however these resolutions can have their own unique difficulties.

  18.  As part of Manifest's standard methodology, every resolution that is entered into our database is assigned a specific meeting business category and certain analytical rules applied to the resolution. These rules are derived from the various national codes such as the Combined Code, as well as best practice guidelines from organisations such as the ABI, NAPF etc.

  19.  If and when the results of shareholder meetings are announced these are also entered into our database and referenced back to the original resolution. From this we are then able to undertake analyses based on a variety of criteria such as type of company, market capitalisation, type of resolution etc. When looking at resolutions relating to remuneration and election of directors we can further drill down into the characteristics of the remuneration plans and biographical or governance structure indicators for individual directors.

  20.  In our analysis we use the term `Dissent'. For the purposes of this report, dissenting votes are those purposely not cast `For' a management proposal and include both `Abstain' and `Against' votes. Dissenting votes on shareholder-sponsored proposals are those purposely not cast `Against' the proposal and include both `Abstain' and `For' votes. Across the various markets, local regulations treat Abstain votes in different ways; in some they have no legal meaning. Irrespective of regulations, however, they have become a strong indicator of shareholder sentiment to demonstrate that shareholders do not feel able to fully lend their support. To use a sporting analogy, the Abstain or Withhold votes (ie where a shareholder has positively withheld their votes, not merely omitted to tick the box) are treated as a `Yellow Card' and an Against Vote a `Red Card'. We would generally say that a dissent level of greater than 5% should be cause for concern for a company, and 10% would constitute what the press would be apt to call a `Shareholder Backlash'.

  21.  The Committee may wish to bear in mind that although voting levels in the FTSE100 constituents are now 63% of shares in issue,[182] this has not always been the case as a decade ago that same figure would have been circa 40% with voting levels of around 30-35% at the time of the Cadbury Report. This is an impressive improvement in numerical terms, especially given that the proportion of shares held by UK institutions has fallen at the expense of increased overseas ownership. As at 2006 it is estimated that foreign investors held 2/5ths of UK shares. For further detailed information relating to the ownership of bank shares we would refer the Committee to the ONS.[183] It is worth noting that ONS estimates that Banks themselves own around 3% of all UK shares, the highest recorded level since 1963.

  22.  Looking at the percentage turnout figures together with the ownership figures, there is a wider question as to whether all UK institutional shareholders are exercising their franchise. Although this represents an interesting question it is outside the scope of this paper due to time and resource constraints.

  23.  While we can measure for quantity of voting, there is no simple metric for the quality of the thought processes and due diligence behind the scenes. In our sales activities we meet investors with a wide divergence of views from those who devote considerable effort and resources to those for whom voting is a non-value-adding operational annoyance to be avoided at all costs. Even within organisations with a commitment to the active oversight of their shares there will be different styles and approaches from those where the governance team is fully integrated into the investment process and others where it is a ring-fenced activity with a narrow remit.

  24.  To challenge the proposals that shareholder concerns about Bank governance would be expressed through votes, we designed 4 tests of voting activity looking at the voting results from UK Banks and the constituents of the FTSE100 over the same period. The tests looked at:

    —  Overall Dissent: Was average overall voting at Banks materially different from companies of similar size?

    —  Share Schemes: Did shareholders have greater concerns about share-based incentive pay at Banks in comparison with other FTSE100 companies?

    —  Remuneration Reports: If concern was not expressed against the share scheme resolutions, would dissent be shown through the report on the remuneration report? and lastly

    —  Director Elections: Ultimately, if shareholders were concerned with management strategy and board oversight they would have had the right and opportunity to either cast a vote of no confidence or remove directors, executive and non-executive. Would we see any correlation of votes with the wider public comments about bank boards?

DETAILED FINDINGS

Overall Dissent

  25.  In the first test, we measured overall `Average Voting Dissent' in the Banks vs. the FTSE100 constituents. That is to we assessed every resolution at every company to discover how much support or dissent management received. The results are as follows:

Figure 1


  26.  UK companies tend to receive unstinting support from their investors with over 95% approval in nearly all instances. Overall, the average dissent for voting at Banks is marginally lower (0.27%) than for FTSE100 companies in general. Dissent only exceeded the average in 4 out of the 11 years under review and then, at most, by 1.73% in 2008. A detailed breakdown of the results can be found in Table 1 on page 15.

  27.  To understand which issues attracted dissent we drilled down further into the data. Looking at the four years where Banks showed higher than average dissent we discovered the following:

    27.1. 2002: Significantly above the all time average and 0.53% `extra' dissent. There were a number of resolutions requiring shareholder consent to approve EU Political Donations which attracted very significant dissent. The regulations on EU Political Donations were generally not very well understood at the time of their introduction and were confused with donations to national political parties.[184] [185][186] Resolutions relating to the election of directors at Bradford & Bingley and Standard Chartered Bank are particularly notable. The director-related dissent can largely be attributed to an enthusiastic implementation of director independence criteria, most notably relating to length of service. Please see Table 2 on page 16 for details.

    27.2. 2004: Total dissent is still below the all time average but we see 0.13% extra dissent in comparison with the FTSE100 overall. Remuneration issues at Bradford & Bingley and Standard Chartered provoked a sharp shareholder reaction.

    27.3 2007: Slightly above the all time total dissent average with 0.86% extra dissent. Two proposed M&A transactions, Barclays with ABN Amro and Standard Chartered with Temasek, plus two remuneration-related resolutions at Royal Bank of Scotland provoked a significant reaction. Manifest's analysis of RBS' 2007 Executive Share Option Plan highlighted our serious concerns regarding the possibility of excessive levels of rewards that could be granted to senior executives.

    27.4. 2008: There is a marked increase in voting dissent with almost double the level of average dissent. On further inspection we can see that this is attributable to four shareholder-proposed resolutions at Northern Rock attracting dissent levels of over 65%; capital raising resolutions from Barclays and remuneration related dissent. Please see Table 5 on page 21 for a detailed breakdown.

LONG TERM INCENTIVE RELATED VOTES

  28.  In Figure 2 below we are looking at a comparison of the overall dissent on the adoption of performance share plans. Table 6 and Table 7 on page 23 show the detailed breakdown.

Figure 2


  29.  With a dissent rate of double that of the rest of the FTSE100, 2002 is the year of highest variation from the mean. However this relates to a single resolution proposed by Bradford & Bingley which attracted 27.40% dissent. In 2004 there were three resolutions that attracted consistently above average dissent; 2008's uplift related to two resolutions. There is a common theme across all years with Bradford & Bingley consistently attracting dissent on a variety of resolutions.

REMUNERATION REPORT RELATED VOTES

  30.  In Figure 3 we see that the average dissent on votes to approve the Remuneration Report in the Banks largely tracks the FTSE100 with a more noticeable trend away starting in 2007.

Figure 3


    30.1. As can be seen in the associated Table 8 and Table 9 on page 23, in overall terms we are only looking at a difference of 0.01% between dissent towards Banks and the whole of the FTSE100. In 2002 there is around half as much concern with Bank remuneration and it is not until 2008 that dissent is 3.3% above the norm.

DIRECTOR ELECTIONS

  31.  Turning our attention to the election of directors, because the directors are the elected agents of shareholders and in theory accountable to them for their actions, we might expect to see some relation between concern about the boards' strategy and oversight and shareholder voting turnout or dissent. The detailed breakdown of these results can be found in Table 10 and Table 11 on page 25.

Figure 4


    31.1 The dissent relating to Bank director elections is clearly significantly lower that the FTSE100 average. The difference is especially marked from 1998 to 2004, the time during which it is said that some shareholders raised doubts about the future strategy of the Banks. Even after this time, although the margin has narrowed, the votes do not bear any relation to the subsequent, alleged shareholder dissatisfaction with and animosity towards certain individuals as reported by the media.

    31.2 There is a peak in dissent in the period between 2000 and 2003, but this applies equally to the FTSE100 group as well as to Banks. This uptick is related to a period of new disclosures by issuers and shareholder concerns regarding non-executive director independence. Looking at the individual resolutions on director re-elections we see a clear trend toward Combined Code related compliance issues. Further details and drill down are available on request.

CONCLUSIONS

  32.  The role of institutional investors in the real "ownership" of quoted companies is the subject of many column centimetres (or inches) and we do not to intend to revisit the theory in this short submission. For those shareholders wishing to be actively involved there are many barriers to contend with including the opacity of disclosures and the compressed time frames that they have to work within. Please see Figure 5 below for the impact of `Peak Season'. It is also clear that there is a significant variation in the resource allocation for the governance professionals, many of whom are not fully integrated into the investment process, and that is not necessarily out of their own choosing.

Figure 5


  33.  There is an education and understanding issue in parts of the City where voting and shareholder democracy is seen as a time-wasting, administrative burden which is irrelevant because either "the shares are going up" or "if we don't like them we sell". For long-term beneficial owners it is not clear that this approach is sustainable. If our stock markets are nothing more than respectable casinos then perhaps not, however we are always mindful of the fact that we are often dealing with the life savings of modestly remunerated individuals who have put considerable trust in the expertise of their investment managers.

  34.  There are also administrative issues for shareholders such as the problems associated with the way that Custodian banks, for their own administrative and P&L preferences, have forced shareholders to hide their share ownership through pooled nominee names. This also leads to anti-competitive bundling and network access practices which have meant that shareholders are not at liberty to vote their shares by more efficient means resulting in numerous lost votes and missed deadlines. Nor can they correlate their voting instructions directly with those received by the company.

  35.  At the outset we said that we wanted to test the assertion that Banks were held to account by their shareholders through the shareholder vote. Taking 2005 as the point at which sentiment is said to have turned against British banks with a subsequent abandonment of their share registers, the data shows no evidence of excess shareholder dissent at Bank meetings in the 3 year run up to this sentiment sea change. There certainly a marked change of voting outcomes in 2008, but these changes are attributable to a very small number of resolutions against one specific company which it could be argued, was a doomed attempt to shut the door after the horse had bolted.

  36.  Would a change in legislation on shareholder oversight bring about the changes that are needed? Possibly, but we would be cautious about a rush to legislation as the unintended consequences of hurried regulation can, as has been seen in other jurisdictions, be far removed from legislations original intention. Taking the US example, the ERISA Guidelines for pension funds mandate voting at shareholder meetings. Lord Myners at one point suggested their introduction to the UK but he was counselled against this on the basis that much of the voting by ERISA funds had become little more than a box ticking exercise with more emphasis on compliance with the letter of the law than its spirit. It also resulted in a massive outsourcing of the due diligence process as many fund managers had little appetite for the chore.

  37.  In 1996 we asked the Financial Services Authority why proxy voting was not included in their Conduct of Business Rules. Our rationale was that votes, in law, are no different that transferability rights and as such their exercise should be the result of a careful fiduciary process. The FSA was not moved by our arguments and to this date the buying and selling of shares is tightly regulated but the after market is not. This is a sad reflection on a market which is said to have the highest governance standards and most comprehensive shareholder protection regime in the world. However until the entire shareholder ownership process comes under the scrutiny of the compliance department it is unlikely to receive the widespread resource allocation it requires.

    37.1 For further information please contact: Sarah Wilson—Chief Executive; or Alan Brett—Head of Research Telephone: +44 (0)1376 503500 Web: http://www.manifest.co.uk. Email: sarah.wilson @manifest.co.uk or alan.brett@manifest.co.uk

APPENDIX

SUPPORTING TABLES

Table 1

OVERALL AVERAGE DISSENT
YearBanks FTSE 100Difference
19981.46%2.63% 1.16%
19991.20%3.02% 1.82%
20001.42%2.54% 1.12%
20012.41%3.39% 0.98%
20024.42%3.89% -0.53%
20033.71%4.53% 0.81%
20042.66%2.53% -0.13%
20051.85%2.08% 0.23%
20062.04%2.16% 0.11%
20072.82%1.96% -0.86%
20084.06%2.33% -1.73%
Period Average2.72% 2.73%0.01%


Table 2

2002 HIGH BANK DISSENT VOTES > 10%
Name Type TitleS/H Res? NarrativePoll ?7 % For% Discr.8 % Abstain% Against Total Dissent
Royal Bank of Scotland GroupAGM 18NoTo authorise political donations and expenditure by Direct Line Group Ltd in terms of the Political Parties, Elections and Referendums Act 2000 No51.50% 46.47%2.03%48.50%
Bradford & BingleyAGM 8NoTo approve amendments to the Performance Share Plan No66.99%5.60% 12.35%15.05%27.40%
Standard CharteredAGM 5NoTo re-elect as a director, Mr C A Keljik No81.23%0.33% 16.20%2.24%18.44%
Northern RockAGM8 NoTo authorise the Company to make EU political donations and/or incur EU political expenditure No78.99%2.85% 10.17%7.99%18.16%
Standard CharteredAGM 13NoTo authorise Standard Chartered to make EU political donations under the Political Parties, Elections and Referendums Act 2000 No83.48%0.34% 12.17%4.01%16.18%
Standard CharteredAGM 14NoTo authorise Standard Chartered Bank to make EU political donations under the Political Parties, Elections and Referendums Act 2000 No83.52%0.65% 12.13%3.70%15.83%
Standard CharteredAGM 7NoTo re-elect as a director, Mr A W P Stenham No84.43%0.33% 9.12%6.11%15.23%
Bradford & BingleyAGM 3NoTo elect as a director, Steven Crawshaw No82.42%5.46% 9.47%2.65%12.12%
Bradford & BingleyAGM 5NoTo re-elect as a director, Keith Greenough No82.73%5.49% 9.13%2.65%11.78%
Royal Bank of Scotland GroupAGM 21NoTo authorise political donations and expenditure by Ulster Bank Ltd in terms of the Political Parties, Elections and Referendums Act 2000 No88.49% 7.99%3.52%11.51%
Royal Bank of Scotland Group AGM 17NoTo authorise political donations and expenditure by Coutts & Co in terms of the Political Parties, Elections and Referendums Act 2000 No88.52% 7.99%3.49%11.48%
Royal Bank of Scotland GroupAGM 19NoTo authorise political donations and expenditure by Lombard North Central in terms of the Political Parties, Elections and Referendums Act 2000 No88.53% 7.99%3.48%11.47%
Royal Bank of Scotland GroupAGM 20NoTo authorise political donations and expenditure by Angel Trains Ltd in terms of the Political Parties, Elections and Referendums Act 2000 No88.53% 7.99%3.48%11.47%
Royal Bank of Scotland GroupAGM 16NoTo authorise political donations and expenditure by National Westminster Bank in terms of the Political Parties, Elections and Referendums Act 2000 No88.54% 7.99%3.47%11.46%
Royal Bank of Scotland Group AGM 15NoTo authorise political donations and expenditure by The Royal Bank of Scotland in terms of the Political Parties, Elections and Referendums Act 2000 No88.54% 7.99%3.47%11.46%
Royal Bank of Scotland GroupAGM 14NoTo authorise political donations and expenditure by the Company in terms of the Political Parties, Elections and Referendums Act 2000 No88.63% 7.99%3.38%11.37%
Standard CharteredAGM 6NoTo re-elect as a director, Sir Ralph Robins No89.53%0.33% 6.08%4.06%10.14%

7  % Turnout calculation methodology was not the same in earlier years so has not been included to avoid confusion. Vote outcome was not routinely recorded at this time.

8  Discr. = Discretionary votes. Votes which the chairman has been granted authority to vote.

Table 3

2004 HIGH BANK DISSENT VOTES > 10%
Name Type TitleS/H Res? NarrativePoll9 % For% Discr. % Abstain% Against Total Dissent
Bradford & BingleyAGM 2NoTo approve the report of the Remuneration Committee No71.50%4.22% 15.28%9.00%24.28%
Alliance & LeicesterAGM 7NoTo re-elect as a director, F A Cairncross10 Yes80.19% 4.39%15.42%19.81%
Alliance & LeicesterAGM 11NoTo approve the report of the Remuneration Committee Yes81.95% 13.62%4.43%18.05%
Northern RockAGM8 NoTo approve the report of the Remuneration Committee No82.61% 10.74%6.65%17.39%
Bradford & BingleyAGM 13NoTo approve the Bradford & Bingley Executive Incentive Plan (2004) No83.66%4.30% 2.08%9.97%12.05%
Standard CharteredAGM 3NoTo approve the report of the Remuneration Committee No89.66% 2.81%7.54%10.35%
Standard CharteredAGM 18NoTo amend the rules of the Standard Chartered 2001 Performance Share Plan No89.98% 1.70%8.32%10.02%


9  % Turnout calculation methodology was not the same in earlier years so has not been included to avoid confusion. Vote outcome was not routinely recorded at this time.


10  Length of service issues idetified.

Table 4

2007 HIGH BANK DISSENT VOTES > 10%
Name Type Title S/H Res? Narrative% Turnout Outcome Poll ?% For % Discr.% Abstain% Against Total Dissent
Royal Bank of Scotland GroupAGM 16NoTo approve the 2007 Executive Share Option Plan 66.31%PassedYes 73.96%4.63% 21.40%26.03%
Standard Chartered AGM 21NoTo approve the waiver in respect of the requirements to enter in to fixed-term written agreements with Temasek and its associates in respect of ongoing banking transactions 68.92%PassedYes 79.60%19.66% 0.74%20.40%
Standard Chartered AGM 20NoTo approve the waiver in respect of the reporting and annual review requirements in respect of ongoing banking transactions with associates of Temasek that the company has not been able to identify 68.92%PassedYes 79.60%19.66% 0.74%20.40%
Standard Chartered AGM 22bNoTo approve future ongoing banking transactions with Temasek and its associates, including the waiver in respect of the requirement to set an annual cap 68.85%PassedYes 79.68%19.58% 0.74%20.32%
Standard Chartered AGM 22aNoTo ratify past ongoing banking transactions with Temasek and its associates 68.85%PassedYes 79.74%19.53% 0.73%20.26%
Standard Chartered AGM 3NoTo adopt the remuneration report for the year ended 31 December 2006 68.92%PassedYes 81.39%3.50% 15.10%18.60%
Royal Bank of Scotland GroupAGM 2NoTo adopt the remuneration report for the year ended 31 December 2006 66.31%PassedYes 85.28%5.49% 9.22%14.71%
Barclays EGM1 NoTo approve the proposed merger with ABN AMRO Holding NV, to increase the authorised share capital and to authorise the directors to issue shares in connection with the merger 59.32%PassedYes 87.81%2.01% 10.18%12.19%
Barclays EGM2 NoSubject to the passing of resolution 1 and the merger becoming effective, to increase the authorised share capital, to authorise the directors to issue preference shares and to amend the Articles of Association 59.32%PassedYes 88.87%2.12% 9.02%11.14%
Barclays Class1 NoTo approve the passing and implementation of resolution 2 at the Extraordinary General Meeting relating to the preference shares and to consent to any resulting change in the rights of ordinary shares 57.97%PassedYes 89.53%2.18% 8.29%10.47%
Barclays EGM4 NoTo approve a general authority to the directors to dis-apply pre-emption rights on the issue of shares for cash 59.32%PassedYes 89.55%0.28% 10.18%10.46%


Table 5

2008 HIGH BANK DISSENT VOTES > 10%
Name Type Title S/H Res? Narrative% Turnout Outcome Poll ?% For % Discr.% Abstain% Against Total Dissent
Northern RockEGM2 YesSubject to the passing of resolution 1, to replace the directors' existing authority to issue shares on a non pre-emptive basis with an authority to issue a lower number of shares on a non pre-emptive basis 37.45%Defeated (Insuff Majority) Yes66.10% 33.90%66.10%
Northern RockEGM4 YesTo delegate powers to the Board to effect the resolutions adopted by the meeting 37.25%Defeated (Insuff Majority) Yes66.01% 33.99%66.01%
Northern RockEGM3 YesTo amend the Articles of Association in relation to the prevention of disposals or acquisitions of assets by the Company 37.25%Defeated (Insuff Majority) Yes65.96% 34.04%65.96%
Northern RockEGM1 YesTo replace the directors' existing authority to allot shares with an authority to allot a lower number of shares 37.24%PassedYes 65.91% 34.09%65.91%
BarclaysEGM2 NoTo approve a specific authority to the directors to issue shares 60.81%PassedYes 76.72%10.17% 13.10%23.27%
BarclaysEGM4 NoTo approve the issue of shares at a discount of 25.3% to the closing share price as at 30 October 2008 60.81%PassedYes 77.77%10.48% 11.75%22.23%
BarclaysEGM3 NoTo approve a specific authority to the directors to dis-apply pre-emption rights on the issue of shares for cash 60.81%PassedYes 77.85%10.44% 11.71%22.15%
BarclaysEGM1 NoTo approve an increase in the authorised share capital of the Company 60.81%PassedYes 78.13%10.39% 11.48%21.87%
HSBC HoldingsAGM2 NoTo adopt the remuneration report for the year ended 31 December 2007 36.32%PassedYes 81.75%7.53% 10.71%18.24%
HBOSAGM10 NoTo adopt the remuneration report for the year ended 31 December 2007 43.98%PassedYes 82.94%6.89% 10.17%17.06%
Bradford & BingleyAGM 15NoTo approve the amendments to the Bradford & Bingley Executive Incentive Plan 2004 31.26%PassedNo 81.36%1.74%13.85% 3.05%16.90%
HSBC HoldingsAGM10 NoTo amend the rules of the HSBC Share Plan 36.44%PassedYes 84.23%6.63% 9.14%15.77%
Bradford & BingleyEGM 5NoTo authorise the issue of shares to shareholders in lieu of a cash interim dividend for the year ended 31 December 2008, including to increase the authorised share capital of the Company, to reduce the share premium account and to approve a specific authority 38.86%PassedNo 85.11%2.73% 12.16%14.89%
Royal Bank of Scotland GroupAGM 2NoTo adopt the remuneration report for the year ended 31 December 2007 59.85%PassedYes 88.39%3.24% 8.37%11.61%
Standard CharteredAGM 3NoTo adopt the remuneration report for the year ended 31 December 2007 73.43%PassedYes 89.41%4.45% 6.14%10.59%
Lloyds Banking GroupAGM 2NoTo adopt the remuneration report for the year ended 31 December 2007 45.96%PassedYes 89.57%9.30% 1.13%10.43%


Table 6

LONG TERM INCENTIVE ARRANGEMENTS DISSENT VOTES (AVERAGE)
19981999 200020012002 200320042005 200620072008 Period Average
Banks2.57%9.21% 4.37%14.54%27.40% 4.51%10.13%5.73% 3.69%8.33%16.34% 8.15%
FTSE 1008.06%7.34% 11.74%15.87%13.47% 11.04%5.75%5.64% 6.55%7.96%7.80% 9.06%
Difference-5.50%1.87% -7.37%-1.33%13.93% -6.53%4.37%0.10% -2.86%0.36%8.54% -0.91%


Table 7

LONG-TERM INCENTIVE ARRANGEMENTS DISSENT VOTES (BANKS)
Name19981999 200020012002 200320042005 200620072008 Period Average
Alliance & Leicester 22.19% 4.53% 2.51% 6.85%
Bank of Scotland 31.50% 31.50%
Barclays 5.66% 1.90% 3.15%
Bradford & Bingley 27.40% 12.05% 16.90%18.78%
Halifax Group 3.63%7.31% 5.47%
HBOS 4.37% 4.21%4.29%
HSBC Holdings 3.00% 3.33% 15.77%6.28%
Lloyds Banking Group 0.63%7.71% 2.52%8.31% 4.81% 4.80%
Northern Rock 2.57% 18.08% 3.80%5.77%
Royal Bank of Scotland 9.21%5.17%12.03% 4.66% 26.03% 11.42%
Standard Chartered 6.94%11.86% 6.49%10.02% 4.57% 8.34%
Yearly Total2.57%9.21% 4.37%14.54%27.40% 4.51%10.13%5.73% 3.69%8.33%16.34% 8.15%


Table 8

REMUNERATION REPORT DISSENT VOTES (AVERAGE)
19981999 20002001 200220032004 20052006 20072008Period Average
BanksN/AN/A N/AN/A4.74% 12.82%10.79%5.98% 6.57%7.75%10.64% 8.95%
FTSE 100N/A8.47% 12.65%8.49%8.84% 17.05%9.55%6.63% 6.14%7.11%7.31% 8.94%
Difference -4.10% -4.23%1.23%-0.65% 0.43%0.64%3.32% 0.01%



Note: Prior to 2002 a number of companies elected voluntarily to propose their Remuneration Report to the vote. No banks chose to do so, hence three years of null data.

Table 9

REMUNERATION REPORT DISSENT VOTES (BANKS)
Company2002 200320042005 20062007 2008Grand Total
Alliance & Leicester 16.63%18.05%2.94% 2.93%3.63%2.74% 7.82%
Barclays17.51% 6.65%4.92%5.93% 5.75%6.27%7.84%
Bradford & Bingley 8.09%24.28%9.77% 13.28%5.32%8.15% 11.48%
Egg1.55% 2.01%0.37% 1.31%11
HBOS21.44% 6.62%1.50%1.45% 3.06%17.06%8.52%
HSBC Holdings21.69% 8.15%5.60%4.84% 4.99%18.24%10.59%
Lloyds Banking Group 4.78%7.08%6.31% 6.14%7.45%10.43% 7.03%
Northern Rock5.49%7.73% 17.39%16.13%10.78% 6.25%10.63%
Royal Bank of Scotland Group3.99% 16.11%7.27%7.84% 7.60%14.71%11.61% 9.88%
Standard Chartered12.70% 10.35%4.44%6.18% 18.60%10.59%10.48%
Grand Total4.74%12.82% 10.79%5.98%6.57% 7.75%10.64%8.95%



11  Egg is 79% owned by Pridential plc therefore 1.3% of 21% free float represents a true dissent level of 6.2%


Table 10

DIRECTOR ELECTION DISSENT VOTES (AVERAGE)
19981999 20002001 200220032004 20052006 20072008Period Average
Banks1.29%1.01% 1.22%2.71%3.30% 3.55%2.03%1.08% 1.13%1.38%1.52% 1.82%
FTSE 1003.68%3.55% 3.31%3.51%3.83% 4.67%1.93%1.45% 1.63%1.55%1.90% 2.67%
Difference-2.39%-2.54% -2.09%-0.81%-0.53% -1.12%0.10%-0.38% -0.50%-0.17%-0.39% -0.85%


Table 11

DIRECTOR ELECTION DISSENT VOTES (BANKS)
Company1998 19992000 200120022003 20042005 200620072008 Grand Total
Alliance & Leicester 3.85%3.87%5.63% 2.44%11.53%5.47% 0.94%0.50%0.75% 0.80%3.68%
Bank of Scotland0.24% 0.20%0.25% 0.23%
Barclays 0.54%0.62% 0.95%0.76%1.20% 1.92%1.74%1.34% 2.21%1.57%1.26% 1.38%
Bradford & Bingley 1.29%9.32% 2.39%1.47%1.37% 1.10%0.70%1.08% 2.30%
Egg 0.46%0.04% 0.20%0.04% 0.23%
Halifax Group 1.71% 1.06%0.78% 1.15%
HBOS 0.59% 1.10%0.74%0.39% 0.58%1.36%0.81%
HSBC Holdings 0.44% 1.47%2.97%2.26% 4.16%2.27%1.17% 0.76%1.41%0.75% 1.76%
Lloyds Banking Group 0.27%0.58%0.30% 1.07%0.57%1.29% 0.66%2.37%1.61% 1.48%0.98%
NatWest Group 0.61% 0.61%
Northern Rock 0.87%1.20% 1.12%0.94% 1.81%2.89%0.92% 0.86%3.27%6.78% 2.17%
Royal Bank of Scotland Group 2.50%3.27%4.18% 0.71%1.69%2.92% 0.56%0.75%1.53% 1.20%1.94%
Standard Chartered 2.89% 0.42%4.64% 9.16%9.79%1.03% 2.07%0.89%0.64% 0.67%2.94%
Grand Total1.29%1.01% 1.22%2.71%3.30% 3.55%2.03%1.08% 1.13%1.38%1.52% 1.82%





181  
Prior to 2008 companies were required to hold a meeting in each calendar year and not more than every 15 months. Back

182   Source: The Manifest Pan-European Voting Review 2008, page 13 Back

183   Source: http://www.statistics.gov.uk/cci/nugget.asp?id=107 Back

184   Political Parties, Elections and Referendums Act 2000 http://www.opsi.gov.uk/ACTS/acts2000/ukpga2000004en14 Back

185   http://www.telegraph.co.uk/finance/2746759/Political-donations-back-on-the-agenda.html Back

186   http://www.parliament.the-stationery-office.com/pa/cm200001/cmstand/deleg2/st010130/10130s01.htm Back


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2009
Prepared 1 April 2009