Shareholders stand to benefit from an increased focus on succession planning for senior management and boards of directors, according to AMP Capital’s Corporate Governance Report for 2013.

The report states shareholders are increasingly interested in how succession planning drives the quality of leadership and equips companies to capitalise on emerging opportunities and tackle short and long term challenges.

Quality of leadership is one of the many intangible factors AMP Capital considers when assessing investment opportunities.

AMP Capital Corporate Governance Manager Karin Halliday said shareholders who take an active interest in the more intangible drivers of value, such as leadership and succession planning, can make better informed investment decisions.

“A board needs to know where a company is heading and whether they have the right management in place to take them there. Shareholders play a valuable role in engaging with boards and shining a light on such issues.

“Simply asking directors about governance issues such as succession planning elevates the importance of these topics and encourages directors to address them,” said Ms Halliday.

“The same thing happened with CEO pay when the ‘Two-Strike’ rule was introduced. While companies know how they will remunerate and what management skills they need, the increased scrutiny has led to constructive dialogue with shareholders.”

The report also provides an update on the benefits of board gender diversity. AMP Capital has found the number of companies it invests in that have no women directors has fallen from 60 per cent to 34 per cent in the last four years.

Ms Halliday welcomed the improved diversity. “In my assessment, boards that have no women are more likely to have other governance issues such as board composition concerns, related party issues and remuneration concerns,” she said.

AMP Capital, which takes seriously its responsibilities as an investment manager, an agent of shareholders in companies and a steward of its clients’ assets, releases the Corporate Governance Report twice a year and includes an analysis of the 2013 proxy season, detailing the votes cast and the governance issues considered.

In addition, this edition of the report also busts some myths of incorporating Environmental, Social and Governance factors into investment analysis, and discusses the challenges of mining in developing countries and the issue of potential stranded assets from climate change.

In 2013, AMP Capital submitted votes on 1645 resolutions at 319 company meetings. Of these resolutions, 88 per cent were supported. AMP Capital either voted against, or specifically abstained from voting, on around 11 per cent of resolutions.

AMP Capital Proxy Voting Statistics (2010 to 2013): 2013 2012 2011 2010
Number of company meetings where votes were submitted 319 332 365 349
Number of resolutions voted on 1645 1734 1827 1748
Meetings where all resolutions supported 71% 63% 64% 69%
Total % of resolutions not supported 12% 14% 15% 14%
Remuneration reports not supported 17% 25% 27% 26%