Superannuation funds are winning their efforts to make Australian companies adopt long term thinking, according to Andrew Gray, investment manager, governance at AustralianSuper.

Longer-term remuneration structures are coming into place and there is a greater acknowledgement of environmental sustainability and dangers.

Part of the shift in behaviour is due to AustralianSuper’s growing ownership of ASX200 companies – 1.5 per cent on average currently and due to its move to manage some of this money in-house.

“These days we do not find it difficult to have access to company boards,” said Gray. “One of the first things we do when we meet with the company is to say we have more than two million members and we explain it is our role to look after the retirement outcomes for those members and from that, we explain what we are expecting from the company.”

He partly attributes the change in behaviour to more super funds taking responsibility for voting on company resolutions and relying less on fund managers.

“Companies had not necessarily been focusing on the beneficial owner, as historically that voice has been quite silent,” said Gray. “They had focused their contact on the fund managers and the stockbroking analysts. Once they found we were interested they have responded.”

Making director rewards more applicable to each company as well as creating long term hurdles for performance measurement has been an output of this engagement.

“We do not like companies saying ‘we are using a particular hurdle because that is commonplace’ or ‘that is what the rest of the market is using’,” says Gray. “We are asking what are the particular value drivers of the company and how can you build that into the remuneration structure.”

 

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