Monitoring investee companies

We believe that institutional investors like M&G should monitor their investee companies.

Shareholders appoint boards of directors to manage company assets on their behalf, and to preserve and enhance shareholder value. In quoted companies, shareholders expect clear accountability by executive management as an essential part of satisfactory corporate governance.

Regular and proactive monitoring (including open and purposeful dialogue with investee companies) enables us to determine whether the board is fulfilling their mandate to shareholders and, ultimately, whether an investment remains appropriate.

  • To ensure success over the long-term we believe company boards must consistently satisfy customers, shareholders and the reasonable expectations of employees, as well as acting responsibly towards society as a whole
  • We expect the boards of our UK investee companies to comply with the Corporate Governance Code and with the spirit of it – companies must explain the rationale for diverging from the Code’s principles and we will determine the appropriateness of the divergence on a case-by-case basis
  • On occasion, we may support resolutions that are not compliant with the Code – we would do this when we believe it is the right course of action for the given circumstances or to progress towards compliance

How M&G monitors investments

Our monitoring process typically includes:

  • Arranging regular meetings with executive management, the chairman and/ or other non-executive directors
  • Daily monitoring of company announcements
  • Reviewing company results (annual and interim)
  • Reviewing external research materials (e.g. broker research reports)
  • Attending company 'capital markets' days for investors and site visits
  • Attending broker meetings to discuss investment recommendations
  • Engaging in specific discussions with companies on material topics, including: strategy, performance and non-financial matters (such as environmental, social and corporate governance factors, capital structures, board performance and understanding how boards are fulfilling their responsibilities, succession planning, remuneration and culture)
  • Attending company engagement/corporate governance meetings (arranged by companies to enhance the engagement process and provide a forum for governance and responsible investment subjects to be discussed)
  • Meetings with remuneration committee chairman (in particular where the company is reviewing their remuneration policy, or prior to general meetings where sensitive or contentious resolutions are being put to shareholders to vote on)
  • Corresponding with non-executive directors in instances where issues have been raised with management, but where progress on these issues is inadequate
  • Maintaining a record of all interactions with companies
  • Attending shareholder meetings

The value of investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested.

M&G's approach to stewardship

Explore all the ways in which we comply with the UK stewardship code