Much investor attention has focused on executive pay policies but Daniel Godfrey, chief executive of the Investment Management Association, thinks remuneration is a secondary issue.
“It is more important to focus on strategy, engagement and long-term thinking [with investee companies], said Mr Godfrey, who took over the helm at the UK investment trade body on Monday.
“When engagement doesn’t work, investors need to push the envelope on collective engagement,” Mr Godfrey said, adding this was the way to add clout on issues where the board and investors fail to see eye to eye on issues, including pay.
In the next few weeks he said he planned to talk to the association’s members and non-members including sovereign wealth funds, activist investors – and Dutch institutional investors, already practised in collective shareholder action – about the main priorities facing the industry.
He said collective engagement was also the way to push forward recommendations made in the Kay Review, examining UK equity markets and tackling the problem of investors’ short-term decision making.
Mr Godfrey maintained it was an investor’s right to sell shares but for those who choose to hold them instead “principled collective action can be effective when engagement fails”.
Not least among the challenges ahead for the fledgling chief is to gain consensus among members on identifying the priorities facing the industry and how to tackle them. “There is a broad range of stakeholders [to consult], so we have to be sure to get agreement,” he said.
Following the discussion period Mr Godfrey will lay out his 12-month plan for the association. He said his previous experience at the Association of Investment Companies, where he led on a number of complex regulatory and industry challenges, will stand him in good stead.
Mr Godfrey has taken from Dick Saunders who led the IMA for 11 years.