Platform boosts investors’ participation in shareholder votes

The number of do-it-yourself investors on the Interactive Investor platform who voted on shareholder resolutions soared after the company automatically opted all of its customers into a voting and information service.

The shift could encourage campaigners who have battled for greater participation by retail savers in shareholder votes, including on corporate pay, strategy and environmental, social and governance (ESG) issues.

The UK’s second-largest funds supermarket said it processed 48 per cent more votes on shareholder resolutions in the first half of this year, compared with the year before. However, the 134,000 votes still represent just 16 per cent of the decisions its clients could have weighed in on.

The company said the boost to voting after it switched all its customers on to the voting system last autumn shows how the financial services sector could do more to encourage individual shareholders to wield their power over corporate decisions.

Previously, customers at II had to opt in to the voting system.

Richard Wilson, chief executive, said the increase in participation had helped to debunk the theory that do-it-yourself investors just don’t want to vote at company meetings.

“Plenty of private investors want to vote, and they are growing in numbers. Not all resolutions will spark an interest, but some are impactful, from climate goals, executive pay through to fair treatment of workers,” he said.

Wilson said it was important that companies “remove unnecessary barriers to voting” and use tech solutions to allow small shareholders to have their say.

Large institutional shareholders, such as asset managers and pension funds, already wield their influence as major owners of companies to shape corporate policy, and have become more activist in recent years around issues such as climate change, diversity and executive pay.

In contrast, many private individuals do not vote on big decisions at companies where they are shareholders, put off by the often complex paperwork involved and the sense that individual votes have little sway.

Consumer group Which? said this month that “many investors are being effectively disenfranchised by investment platforms with a tediously complex voting process”.

Some investment providers like Interactive Investor have tried to make the process easier, using tech systems that allow investors to view information and cast their votes more easily online. In the UK, politicians and the financial services sector are trying to boost retail investors’ participation in capital markets.

The proportion of eligible voters actually cast by II customers has risen from just 6 per cent in the first half of 2019 to 11 per cent last year. This year’s figure of 16 per cent still shows the vast majority of votes go unused.

Consultant Lang Cat last year praised Interactive Investor’s moves to nudge customers towards voting. “Exercising shareholder rights by voting and attending AGMs is a crucial part of investment company ownership,” analyst Chris Bredin said at the time.

The two annual general meetings that attracted the most attention this year from II clients were Lloyds, which faces controversy on executive pay, and oil major BP, which is under pressure over the transition away from fossil fuels.