Companies based in Europe’s most troubled peripheral nations have seen a sharp rise in shareholder dissent this year as investors increasingly rebel against boardroom pay schemes and proposals for rights issues.

Greece, Ireland and Portugal have seen the biggest rise in dissent, according to European Union-wide analysis of voting patterns at the annual general meetings of large and medium-sized companies in the first six months of this year, carried out by the Institutional Shareholder Services.

“The increased level of dissent in these countries reflects the economic turmoil, driving investors to vote in meetings and take a more active stance in their company ownership,” said Jean-Nicolas Caprasse, European governance head at ISS. This contrasted with static levels of dissent across the EU over the past four years, he added.

The report showed highest levels of opposition – including voting against a proposal or abstaining – focused on remuneration; capital increases such as rights issues; and company share plans.

“Many companies had to re-capitalise after the financial crisis and many of these came to a shareholder vote. This affects shareholders and if their opinion is not respected then protest occurs,” said Mr Caprasse.

Frank O’Dwyer, chief executive of the Irish Association of Investment Managers, attributed increased dissent among shareholders in Ireland to “the destruction of value in the banks, which once represented about 60 per cent of the market cap in Ireland.” He estimated about 99 per cent of that value had gone.

Paulo Pinto, vice-president of the Portuguese Investors’ Association, said shareholders were objecting to specific company events. For example, he said shareholders had rejected takeover proposals for Cimpor, Portugal’s biggest cement producer, earlier this year.*

Another issue was Portugal Telecom’s purchase of a complex minority interest in Brazilian fixed-line operator Oi after it sold its half of Vivo, a Brazilian mobile venture, to Spain’s Telefónica. “These three events created the dissent,” Mr Pinto added.

Greece, Ireland and Portugal, and the 17 EU member countries polled, also saw a rise in voting levels at company meetings, with an overall EU average of nearly 63 per cent, up 1.1 percentage points. The UK showed the sharpest rise, up to 71 per cent from 68 per cent a year earlier.

Mr Caprasse attributed the increased voter turnout in the UK to more investors “following the requirements of the Shareholder Code,” launched in July 2010 to encourage institutional investors to engage more effectively with the companies in which they invest.

“Changes in investor behaviour following the code have spread beyond the UK,” he noted, with Netherlands launching its own shareholder code this summer. However company disclosure on voting results still remains patchy, with only the UK, Norway, Finland, Greece and Ireland disclosing full results.

Additional reporting by Sara Silver

* This article has been amended since original publication to clarify details of shareholder action in Portugal.

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