* ABI's investment arm, IMA to merge into new body
* To give investors a stronger voice in company meetings
* Follows politician plans to counter market short-termism
* Asset managers under pressure to justify fees, returns
(Recasts, adds detail, quote, background)
By Simon Jessop and Chris Vellacott
LONDON, April 11 British company bosses could
face a rougher ride at investor meetings in future after two
trade bodies representing trillions of pounds joined forces to
fight for change in the boardrooms of the largest firms.
That could mean 2012's "shareholder spring" - when investors
gave a high-profile thumbs down to the bumper pay and perks
proposed by several companies - becoming a more regular event.
The tie-up will see Britain's Investment Management
Association merge with the Association of British Insurers'
(ABI) investment affairs unit, which advises members how to vote
at company meetings.
The decision comes days after EU financial services chief
Michel Barnier proposed new rules on shareholder rights to make
companies more answerable to their owners.
It also follows frustration among investors over bonuses at
bank such as Barclays which raised its payouts for
staff by 10 percent last year, despite a one-third drop in
The aim of the merger is to more effectively lobby on issues
affecting asset managers and owners.
"It is better and more powerful if you do it as a single and
more unified voice," Robert Hingley, director of the ABI
investment unit that will move across to join the new trade
body, said in an interview with Reuters.
The ABI, whose 300 members hold investments around the world
worth nearly $3 trillion, currently uses a colour-coded alert
system to advise its members, issuing "red top" alerts to
indicate serious concerns about how a company is being run.
And it is the asset owners that politicians want to see get
a better deal, both from the companies themselves and also the
asset management industry, under pressure to justify fees and
returns in a low interest rate, post-financial crisis world.
Both bodies to be merged represent insurers and asset
managers that hold a large number of the shares issued by
companies in Britain's FTSE 100 and other indexes.
However, as representatives of British investors, they have
seen their influence wane in recent years as the shareholder
base of UK companies has become more internationally diverse.
"We have situations where conventional engagement by
individual investors, or the existing mechanism for collective
engagement, have not been able to have the desired impact," said
Daniel Godfrey, chief executive at the IMA, whose members manage
assets worth more than 4.5 trillion pounds.
"And that's particularly where there are very big companies
with a very diversified shareholder base," added Godfrey, who is
to head the new, as yet unnamed, body.
The new organisation would be able to offer better and
deeper assistance to asset managers, he said, and would
complement the work of the Investor Forum, which represents the
voice of overseas investors.
It would work with companies to foster a culture of
longer-term strategic thinking, in line with a government report
that criticised short-termism in financial markets.
That report, produced by economist John Kay in 2012,
suggested investors could deliver long-term benefits if they
engaged collectively with company boards, rather than
(Editing by Pravin Char)