The shareholder's voice

This article appeared in the March 2011 ASX Investor Update email newsletter. To subscribe to this newsletter please register with the MyASX section or visit the About MyASX page for past editions and more details.

New ASA chief executive Vas Kolesnikoff (pictured) focuses on the big issues.

Photo of Vas Kolesnikoff

From ASX

Vas Kolesnikoff was appointed chief executive of the Australian Shareholders’ Association (ASA) in January 2011. ASX Investor Update asked him about his plans for the ASA, a non-profit organisation that has worked to protect and advance the interest of investors since 1960, and currently has 7500 members.


(Editor’s note: ASX conducts its popular ASX Investor Hour seminars in conjunction with the ASA to help improve investor education in Australia.)

ASX Investor Update: Vas, what role do you see the ASA playing on behalf of investors?

Vas Kolesnikoff: The board and I want the ASA to have a more commercial approach to governance issues. Ultimately what matters most to investors is the performance of their investments. Good governance is vital, but our interest is in how that governance leads to better investment performance and safeguards and protects investor interests. We want to ensure that the interests of the executives running the companies are aligned with the long-term interests of the shareholders and investors. We seek to engage and work with fund managers, super funds and companies to give small investors a much greater say on investment matters and governance generally.

ASX Investor Update: How do you rate the standard of governance in Australian companies?

Vas Kolesnikoff: Unfortunately, it’s still a mixed bag. We see some companies working very hard to maintain good governance or improve standards, and others that refuse to change. There are still not enough boards that have meaningful engagement with retail shareholders, or with organisations such as the ASA. The goal of the ASA is to provide a collective voice for investors and give them the level of access to boards they cannot get individually. We would welcome more dialogue with boards on matters that affect smaller shareholders.

ASX Investor Update: What specific issues concern ASA?

Vas Kolesnikoff: Risk management and executive pay is still a big one. We monitor companies to ensure executive pay is aligned with executive performance, and that good governance is in place to achieve adequate investment returns. Executive pay is still too complex. There are too many complicated remuneration packages and complicated remuneration reports. Even accountants I know complain that directors they work with struggle to understand the complexity in financial reports.

Also, long-term incentive plans, typically three years for executives, are far too short. We would prefer such executive plans to be over at least four or five years. I don’t know many investors or super funds that consider “long term” to be three years. The risk in such short-dated incentive plans is that they may give executives too much incentive to make short-term decisions that are not in the best interests of the company, or not aligned with long-term shareholder interests.

ASX Investor Update: Dividends are a big issue for retail investors. Are companies doing enough to reward long-term shareholders with higher dividends?

Vas Kolesnikoff: No. We saw the largest listed companies raise tens of billions of dollars through heavily discounted share placements to fund managers during the GFC, often at the expense of retail investors who could not participate in share purchase plans. We think many companies have scope to lift dividends, or pay special dividends if they are earning attractive profits and have a large surplus cash holding. My fear is we will see more capital management initiatives by companies through share buybacks that are more advantageous to fund managers, when small investors would prefer their returns through higher or special dividends. We will certainly be raising this point with boards on behalf of retail investors.

ASX Investor Update: Are you concerned by falling attendance at annual general meetings?

Vas Kolesnikoff: Yes. We never want investors to become apathetic about their investments or forget they own part of the company. A lot of small investors feel they don’t have a voice and that their single vote is not going to change anything at an AGM, so they do not bother casting their votes or even attending an AGM. They may not realise another investor has the same concern, and that if retail investors join forces through the ASA, they can actually have a strong voice which will be heard.

We encourage investors to join and nominate the ASA as their proxy (representative on shareholder voting matters). Our members monitor and analyse voting matters and provide an informed opinion on how best to vote on company matters to help retail investors. The ASA is fully independent and works to further the interests of smaller investors to ensure they are better informed and their voice is recognised by the companies.

ASX Investor Update: Vas, you mentioned investment performance earlier. How does the ASA help investors protect their capital and safeguard against company failure?

Vas Kolesnikoff: Risk management for investors forms a huge part of what the ASA is concerned with. We look at boards and companies to assist investors in protecting their investments. For example, we might examine issues such as the independence of boards, board composition or the number of directorships held by directors. And through our publications and education courses we seek to give investors the opportunity to learn and gain a better understanding of what to look for in their investment decisions; for example, when a company they own has fundamentally changed its business operations or strategies. We took many calls during the GFC from investors who simply did not realise their company had taken on all this debt and moved away from its core purpose, and that they owned shares in a company vastly different in risk to the one they originally bought shares in.

ASX Investor Update: Why would an investor join the ASA?

Vas Kolesnikoff: First and foremost, I think every small investor should join the ASA because they will become part of a collective and totally independent voice working in the interests of shareholders. We cannot have the influence required to act in protecting small shareholder interests without a growing membership.

Second, our members can attend meetings of likeminded investors to discuss topical issues and our education seminars will continue to cover diverse topics from taxation, financial analysis, estate planning and superannuation. Also, our conference in April (in Melbourne this year) will again provide an opportunity for members and non-members to learn about current investment issues, as covered by a strong list of respected market professionals.

Third, as part of the membership, investors receive our publication (Equity) and have access to free or low-cost education courses. Membership is presently very reasonably priced at $115 a year. Some members are very active, while others are happy just to receive the publications and support the organisation in the knowledge that the ASA is working to further their interests.

ASX Investor Update: Vas, you have had a successful career in chartered accounting and investment banking. Why did you take on the role as ASA CEO?

Vas Kolesnikoff: I’m a passionate investor. I loved the idea of being able to help investors have a collective voice and get better access to boards on matters that affect their investments. I had watched the governance debate for years from the sidelines, and saw lots of good and bad things happen. And I wanted the ASA to move away from an old perception of focusing mostly on company remuneration reports, to an organisation that works constructively with boards, fund managers and super funds on a range of issues, on behalf of shareholders. Industry super funds, for example, can see the common objectives with the ASA and are showing much more interest in the governance debate as they seek investment performance for their members. I believe their interests are clearly aligned with those of the ASA.

That said, I do not want to downplay the ASA’s excellent work in the past to highlight executive pay problems or its role in the governance debate, as the ASA will continue to provide a forceful voice when its sees boards not acting in the interests of small shareholders. Our opinions will be as strong as ever. But we must view governance in the framework of investment performance; that is, how does the structure of an executive pay contribute towards better company performance and ultimately create better returns for investors.

ASX Investor Update: How can investors learn more about the ASA?

Vas Kolesnikoff: Visit our website at, email, or call 1300 368 448 or 02 9411 1505.

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