Hermes Pensions Management, owned by the $53.79 billion BT Pension Scheme, London, joined the Enhanced Analytics Initiative, pledging to allocate at least 5% of its annual broker commissions to brokerage firms that best analyze non-traditional issues that could impact corporate value, said Colin Melvin, Hermes director-corporate governance.
"We want to give brokerage firms a commercial incentive to produce research on extra-financial issues," Mr. Melvin. These issues include mergers and acquisitions, corporate governance, employment standards, executive compensation and environmental impact. These areas of research are often ignored by brokerage research but could have a major impact on corporate valuation, he said. By pledging at least 5% of their commissions, the EAI seeks to provide brokerage firms with incentives to provide research in these areas
For example, "the true impact of merger and acquisition activities often is ignored by brokerage research," he said. "Research shows 80% of mergers and acquisitions destroy value."
Hermes manages $93.9 billion form some 200 clients, including most of BT's pension assets.
