Company managers dissatisfied with investors

Most companies do not feel their institutional investors are well prepared for one-to-one meetings with management, according to a corporate governance survey from Extel. Many fund managers had not even read the latest annual report before attending such a presentation, the survey claims.

Such meetings usually involve the finance director, the chief executive and often the investor relations manager. On average, UK companies had 39 meetings with institutions. The largest, those with market capitalisation over u5bn, averaged 54 meetings a year.

More than half the companies surveyed by Extel said most professional investors are unable to judge the issues of greatest concern to the management.

Stockbrokers’ analysts scored higher than their client fund managers on such criteria, though brokers were often accused of being less focused on medium- and longer-term issues than investors. Company managers regard brokers as ‘unwelcome’ when they meet their institutional shareholders.

But while almost all companies will discuss their future capital and investment plans, few investors offer constructive feedback on what they are told. Even so, most companies claim to attach ‘some’ or ‘significant’ weight to views of investors, particularly with regard to strategic direction, corporate governance and financial structure.

Questions about corporate governance issues revealed a further split between what companies are prepared to discuss and what investors ask about. About four out of five investors do not take advantage of the fact that companies are prepared to discuss such matters.

Companies voted Standard Life the best all-round investor, in terms of such matters as being prepared for meetings with companies and having views that influence management. Mercury Asset Management, PDFM and the Prudential were close behind.

The 1996 Extel Survey of Corporate Governance: Meeting institutional investors is available from Karen Bailey (Tel: 0171-825 8000), u195.