Voting Outcomes for the NIFTY 500 companies for FY20-21 is a comprehensive analysis of how shareholders have voted, and the resulting trends that are telling of how the relationship between investors and companies is evolving.
The findings are summarized below:
- There were 687 shareholder meetings held during the year, in which 3776 resolutions were presented to investors for a vote;
- Five resolution categories accounted for over 80% of the resolutions. These are director appointment 1295 or 34.3% of the resolutions, adoption of accounts (562, 14.9%) remuneration and compensation (459, 12.2%), auditor re(appointment) and remuneration (430, 11.4%), dividend distribution (335, 8.9%);
- 15 of the 3776 resolutions presented last year by the NIFTY500 companies were defeated. Of the 13 resolutions withdrawn during the year, some were withdrawn on the morning of the meeting, possibly suggesting that these resolutions too may have been defeated.
- Promoters owned 55.96% of NIFTY500 companies’ equity and voted 91.6% of their shares – their abstentions can be attributed largely to those resolutions that required a majority of minority vote. When they voted promoters almost always voted in support of the resolutions – the 0.03% of the times they voted against any particular resolution is largely in case of intra-promoter group disputes.
- Institutional investors too seem to be supporting resolutions more often that voting against. This investor group owned 26.83% of NIFTY 500 companies’ equity and cast 77.14% of eligible votes – the abstentions attributable to either conflict of interest or if they owned passive stock. But this is set to change as SEBI has mandated that mutual funds are required to vote resolutely on all shareholder resolutions – other asset managers are expected to follow suit.
- Institutional investors cast 4.15% of their votes against resolutions. There were 18 resolutions this year on which institutional investors unanimously voted against.
- Contrary to public perception, the most push-back from investors was not on related party transactions, but on resolutions relating to the approval of stock option schemes. Investors test for an alignment of interest with these schemes while companies think of these as either deferred compensation or cash saving schemes. It is the widening difference between these two vantage points that makes stock options schemes the most controversial of all resolution categories.
“Institutional investors voting 77% of their shares is a clear sign that the focus on Stewardship by the regulators - SEBI, IRDA and PFRDA, is having the desired impact. It also busts the myth that domestic investors don’t vote,” said Amit Tandon, managing director, IiAS. “We expect this number to soon cross 90%. This is going to change the dynamic between investors and companies,” he added.
“We are seeing a steady shift away from a tick-the-box to a more nuanced approach. Investors are being more thoughtful while voting on individual resolutions and engaging with companies before voting against a resolution.”, said Hetal Dalal, president and COO, IiAS. “This is reflected in the voting patterns,” she added.
Data for preparing this report has been sourced from IiAS ADRIAN (iiasadrian.com). IiAS ADRAIN is a repository of data on shareholder meetings, types of meetings, resolutions, voting outcomes and how each investor voted. their rational – if publicly disclosed. ADRIAN has data on more than 54,000 resolutions across 900 companies, and how more than 200 investors have voted and is constantly being updated.
A copy of the report is here