ShareAction has suggested that asset managers "too often" side with firm management on controversial votes at annual general meetings,  even when there is a clear case for challenging company management on a vote.

Aberdeen Asset Management, BlackRock, HSBC Global Asset Managemnt, Schroders Investment Management, Hermes Investment Management, and M&G Investment Management were named by the sector watchdog as the asset managers who most consistently support corporate management even on the most controversial votes, out of 33 UK asset managers surveyed in the research.

“Most of us investing with big-name asset managers trust them to vote sensibly on a host of controversial issues at the annual general meetings of the companies we own. But our survey suggests a wide range of big names in asset management aren’t exercising their stewardship responsibilities at some of the world’s biggest companies," said ShareAction CEO Catherine Howarth.

In order to make their claim, ShareAction identified votes at the annual general meetings of major companies in 2014 where there was more than 30% dissent from shareholders and looked at who voted how on these controversial votes. Most covered executive pay and re-electing board members.

"While the detail of any one vote may not be indicative of an approach, there does seem to be a pattern for some managers across the votes we looked at with significant shareholder dissent," Howarth continued. 

"We expect investors will be asking tough questions of their asset managers, particularly those who appear to be simply backing management most of the time, based on this report. Investors should on the whole support company management. However, they should be willing to vote against management’s voting recommendations to protect the long-term interests of their clients and their beneficiaries.”

Meanwhile, asset managers named as having a strong track record of voting against recommendations by corporate management on controversial votes in ShareAction’s survey were Threadneedle Asset Management, AB (Alliance Bernstein), Aviva Investors, and Goldman Sachs Asset Management.

Sectors affected by the controversial votes included pharmaceuticals, energy, fashion, tourism, defence, consumer goods, transport, and financial services. Investee companies included AstraZeneca, BG Group, Burberry, Carnival, Reckitt Benckiser, and Standard Chartered.

Saker Nusseibeh, chief executive at Hermes Investment Management, one of the asset managers that most consistently supported management in votes according to ShareAction's research, responded by welcoming the the report but defending Hermes' engagement record.

"Our approach to engagement, including voting, as directed by our clients is with the objective of achieving beneficial change, not to mount a campaign or ‘box tick’," said Nusseibeh.

"At larger companies or those where clients have a significant stake, we seek to have dialogue ahead of voting against or abstaining on any resolution.  We vote accordingly and as part of a constructive discussion with the company’s board."

In Herme's annual voting and engagement report, the firm's engagement team voted a 10,363, analysing 99,724 resolutions. At 4,606 of those meetings one or more resolutions was opposed and at only 20 meetings the firm abstained. Hermes voted with management by exception at 41 meetings and supported management on all resolutions at 5,696 meetings.

The report was ShareAction's first that focused on asset management voting policy and practice. It also reviewed disclosure transparency and named Aviva Investors, F&C Investments, Newton Investment Management, Royal London Asset Management and Standard Life Investments as the most transparent asset managers.

Six asset managers do not disclose their votes as a matter of practice: Artemis, Capital International, Invesco Perpetual, J O Hambro Capital Management, Santander, and Wellington. The watchdog emphasised that the UK Stewardship Code, to which all are signatories, recommends that asset managers should routinely disclose how they voted.