Schroders Flexes Shareholder Voting Muscle; Sets Out Wealth Growth Targets

Tom Burroughes

8 October 2021

voted against company bosses in 2021 annual general meetings more times than it did a year earlier, figures show.

The UK-listed firm also voted against a larger number of company resolutions because it was more concerned about a lack of gender diversity than it was a year earlier.

Separately, the business set out its wealth management growth ambitions out to 2025.

The firm disclosed its annual general meeting voting patterns at a time when such groups are being urged to use their market muscle to encourage boardroom changes. (See here for a related story about executive pay and AGM voting.) Schroders oversaw a total of £76 billion ($103.5 billion) in assets under management, giving it considerable market clout.

Schroders voted on a total of 1,416 shareholder proposals in the 2021 AGM season, up from 1,206 in 2020.

The pandemic’s disruption to business life in 2020 meant that many companies retrospectively adjusted remuneration plans for bosses because targets set early last year were no longer achievable or relevant, Schroders said.

“We assessed these pay and bonus packages on a case-by-case basis, taking into account government support received, share price performance and dividend status, and how performance has been used to justify awarding bonus pay-outs,” the firm said, explaining its voting record.

“Our objective is to ensure pay outcomes are still aligned usefully with performance and reward management teams who have navigated their company relatively well through the pandemic,” it continued. “In the US, it has long been company practice to propose a long-term equity plan that is entirely time-based and lacks performance conditions. In normal times, we would vote against these proposals.”

“But given the difficulties that companies have faced when setting long-term targets as a result of the pandemic, we have made an exception this year. Provided the company has outlined a commitment to increasing the performance element of the incentive in the coming year(s), we have supported long-term plans that are 50 per cent time-based,” it added.

The disclosure of voting records comes at a time when firms are talking more about how they use financial power. To an extent, the drive towards ESG investing, and concerns about gender, racial and ethnic diversity in the boardroom, are driving this. Debate continues on to what extent these concerns fit the fiduciary obligation of capital managers to maximise shareholder returns.

Wealth growth ambitions
With its wealth management joint venture with the UK’s Lloyds Banking Group, and its strategic stake in Sandaire, the multi-family office, Schroders is targeting an audience ranging from the mass-affluent to ultra-high net worth space.

It wants to have a total of £115 billion in assets under management by 2025, the group said in an update on its wealth business progress. It has four franchises: Cazenove Capital; Schroders Personal Wealth (its Lloyds JV); Schroders Wealth Management, and Benchmark Capital. Now a global organisation, Schroders has booking centres in the UK, the Channel Islands, Switzerland, Hong Kong and Singapore.

Its presentation refers to four opportunities: wealth creation in the UK regions; fragmentation of family offices; declining UK advisor numbers as people retire from the sector, and the need for clients to have a single picture of financial affairs.

At present, wealth management business accounts for 16 per cent of the Schroders group’s total pre-tax profit; this business has a higher margin on assets (56 per cent) than for its asset management side (37 per cent).