Taking ownership in a new patch

THE shake-up in Australia's proxy advice industry continues, with high-profile corporate governance advocate Dean Paatsch - along with two former colleagues - launching a venture as this year's annual meeting season goes into full swing.

By InvestSMART · 25 Oct 2011

By InvestSMART ·
25 Oct 2011

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THE shake-up in Australia's proxy advice industry continues, with high-profile corporate governance advocate Dean Paatsch along with two former colleagues launching a venture as this year's annual meeting season goes into full swing.

The Melbourne-based firm, Ownership Matters, is fronted by Mr Paatsch, Martin Lawrence and Simon Connal, all of whom previously worked at the Melbourne office of US-owned proxy adviser Institutional Shareholder Services.

It comes amid the crucial AGM season, made more intriguing this year with the debut of the contentious "two strikes" rule on executive pay which can force a vote on a board spill if enough shareholders oppose a company's remuneration report two years in a row.

It is the busiest time of the year for proxy advisers, who advise institutional shareholders how to direct their AGM votes on corporate governance issues such as executive pay.

But Mr Paatsch said the venture would be a year-round operation, with a service advising clients on regulatory reform matters, and a "bespoke" service applying deep scrutiny to particular companies or issues at clients' requests.

He said Ownership Matters would also adopt a think-tank-like role, pursuing a "public research program" on corporate governance issues and market practices. It has snared one of ISS's major clients, the Australian Council of Superannuation Investors, and had several other clients, he said.

The profile and influence of proxy advisers has expanded in recent years, but they have drawn criticism from some directors that they wield too much power

"We make bullets, we don't fire them," Mr Paatsch said. "It is up to our clients to use our advice in a way that they think is going to serve their interests."

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Frequently Asked Questions about this Article…

What is Ownership Matters and why was the new proxy advice firm launched?

Ownership Matters is a Melbourne-based proxy advice firm launched by former Institutional Shareholder Services (ISS) staff. It was set up amid a shake-up in Australia’s proxy advice industry and as the busy annual meeting (AGM) season and debate over executive pay intensify.

Who are the founders of Ownership Matters?

The firm is fronted by Dean Paatsch, Martin Lawrence and Simon Connal, all of whom previously worked at the Melbourne office of US‑owned proxy adviser Institutional Shareholder Services (ISS).

What does a proxy adviser do and how does proxy advice affect AGM votes?

Proxy advisers research corporate governance issues and advise institutional shareholders how to direct their AGM votes on matters such as executive pay and board composition. Their research and recommendations can influence how large investors vote at company meetings, particularly during the busy AGM season.

What is the 'two strikes' rule on executive pay and why should investors care?

The 'two strikes' rule means that if a company’s remuneration report is opposed by a substantial number of shareholders in two consecutive years, it can trigger a vote on a board spill. That makes executive pay a higher‑stakes issue at AGMs and increases the relevance of proxy advice for shareholders.

How will Ownership Matters’ services differ from standard proxy advice?

According to the article, Ownership Matters will operate year‑round rather than just at AGM time. It plans to offer regulatory reform advice, bespoke deep‑dive scrutiny of specific companies or issues on client request, and a public research program on corporate governance and market practices.

Who are some clients of Ownership Matters?

The firm has secured the Australian Council of Superannuation Investors (ACSI) as a major client and said it has several other clients as well.

Should retail investors follow proxy adviser recommendations when considering corporate governance or executive pay?

The article notes proxy advisers provide recommendations to institutional shareholders, but they don’t cast votes themselves — in the words of Dean Paatsch, 'We make bullets, we don't fire them.' Everyday investors should be aware of proxy advice influence but remember it is ultimately up to each investor or their chosen representative to decide how to vote.

Why have proxy advisers attracted criticism and what does that mean for investors?

Proxy advisers’ profile and influence have grown, prompting criticism from some company directors who say advisers can wield too much power. For investors, this highlights the importance of understanding proxy advice, checking who advises whom, and considering multiple perspectives before making voting decisions.