JP Morgan has a new fully electronic voting system operating in
Australia, which showed spectacular results during the recent AGM
season.
We have a breakdown of the voting figures from all the companies that
used the new system at their last AGM below.

Crikey spoke at the “6th annual custody and
administration conference” at Sydney’s Star City casino last month and
the brochure described the topic thus: “Is it getting better? An
opinionated look at the state of Australian corporate governance.”

Whilst we banged on for half an hour about the shallow directors’ club
gene pool, executive pay, proxy voting rorts and our wishlist of
governance reforms, the most interesting information of the morning
came from a speaker on the following panel, JP Morgan’s Australasian
director of investor services, Graeme Arnott.

The are four big players in the Australian custody market, US giants JP
Morgan and State Street and their Australian competitors ANZ Nominees
and National Nominees. They are the registered owners of more than $500
billion worth of Australian securities and have very involved
relationships with the fund managers and the super funds who they act
for.

When it comes to voting at AGMs, the custodial manager needs to be in
the loop. However, when you have 1100 AGMs in October and November
alone each year, this generates an enormous amount of paperwork.

JP Morgan is now in the Australian market with a full electronic voting
system developed by ISS in the US and the results were spectacular
during last year’s AGM season.

Whilst JP Morgan is the registered custodial owner of about 12 per cent
of the Australian equities market, Graeme Arnott produced some figures
at the conference this morning showing that they represented about 25
per cent of all the shares voted at the big AGMs last October and
November.

JP Morgan’s Australian clients were suddenly voting about 80 per cent
of their shares whereas the average for the entire market remains at
about 35 per cent.

This is quite a revolution and puts pressure on ANZ Nominees and
National Nominees (owned by NAB) to quickly embrace the new technology
as these figures are quite staggering and suggest electronic voting
will cause a seismic shift in institutional voting patterns.

With the growing preponderance of third party proxy advisory firms such
as Corporate Governance International and SIRIS, what we need is for
institutions to receive the electronic voting forms and the voting
advise through the same platform.

So far, that hasn’t happened but Crikey would hope an open access
regime with sensible pricing would be made available by the big third
party proxy advisory outfits.

Check out the figures provided by Graeme Arnott at the conference last month:

Company % held by  JPMN % Voted by
Australian Clients
% Voted by
International Clients
Overall % Voted % Voted
of all Shares Issued
Last Year % Voted
by Australian Clients
BHP Steel 14% 85% 37% 60% 36%
Toll Holding 10% 83% 35% 62% 29%
Brambles 13% 67% 57% 61% 34%
Amcor 14% 85% 66% 73% 42%
IAG 12% 83% 54% 76% 34% 93%
Qantas 16% 76% 42% 57% 28% 78%
Westfield 10% 77% 39% 61% 46%
AMP 8% 78% 56% 70% 34% 36%
Coles Myer 9% 64% 54% 58% 34%
Fosters 17% 70% 75% 73% 43%
NAB 12% 88% 44% 67% 39% 58%
BHP/Billiton 15% 70% 51% 60% 41% 35%
CBA 11% 78% 36% 55% 27%
ANZ 15% 87% 56% 72% 41% 63%
Telstra 9% 73% 41% 64% 30% 65%
Westpac 17% 83% 62% 72% 45% 61%
News Corp 11% 79% 48% 58% 36% 69%
Woolworths
(dual listed)
13% 54% 74% 66% 17% 63%
Wesfarmers 9% 87% 28% 62% 30% 31%
St George 8% 85% 27% 77% 36% 62%

Peter Fray

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