LONDON - Everyone does not welcome questions from shareholders.
In Hong Kong, a shareholder was escorted from a corporate annual meeting after disturbing management's veneer by asking a legitimate question about the company, related Christine Mallin, a professor of finance at the Nottingham Business School of The Nottingham Trent University. The woman was held in a room guarded by two "heavies" until the meeting concluded.
Perhaps they had good cause, given the experience elsewhere in Asia: in Japan, most companies hold their annual meetings on the same day in late June to avoid the sokaiya - extortionists who take payoffs in return for keeping the peace during meetings, Ms. Mallin told the International Corporate Governance Network's first annual meeting. That way, Japanese companies can limit the damage.
Institutional investors from around the globe came to London to swap stories on how they were combating difficult corporate managements and handling cumbersome voting procedures as well as to discuss trends in this swiftly evolving area.
Established in March 1995 in Washington, the London conference represented the group's first meeting, providing an opportunity to compare notes, set direction and, of course, network.
Some of the issues the group might tackle: developing a common code of best corporate governance practice; evaluating whether voting should be compulsory or voluntary; and exploring pre-emption rights.
Richard Regan, head of investment affairs for the Association of British Insurers, and Keith Douglas, general manager of the Pension Investment Association of Canada, serve as co-chairmen of the seven-member coordinating committee. Election of officers will be held at next year's meeting.
While no earthshaking news came out of the conference, some little gems emerged. For example, one participant observed that U.K.-based custodians charge for voting a client's shares, while the service is part of the basic custodial package in the United States.
Other interesting differences surfaced. Britain's Labour Party favors requiring pension funds to vote their shares, a position opposed by the National Association of Pension Funds.
But in many other countries, it's still required to show up at the meeting to cast one's ballot. In a recent move, Australia now will permit shareholders to vote by fax, although authorities stopped short of permitting voting by electronic transmission, explained Ian Matheson, executive director of the Australian Investment Managers' Association.
The issue is not whether voting should be compulsory, Mr. Matheson said, it's how voting is conducted.
In a related issue, U.S. corporate governance experts favor confidential voting to avoid undue influence by corporate management. U.K. experts, however, are pushing for public disclosure of voting policies, if not the votes themselves, to ensure that shareholders exercise their votes.
Meanwhile, several speakers noted the helpful influence the media can have in promoting shareholder causes. "The media helps a lot in terms of unlocking shareholder values," said Andre Baladi, an independent Swiss corporate governance expert.
Other speakers noted that turning to the media is a last resort, and that investors seek to work out issues behind closed doors first.
"Confrontation is not something you begin with," said Bill Crist, chairman of the $100 billion California Public Employees' Retirement System, Sacramento. "Confrontation happens when there is no responsiveness" from management, he said.
