The investors, with assets totalling over $1.3trn (£0.9trn), have written to Obama saying that the reforms are needed to restore investor trust in the integrity of US capital markets and public corporations.
The letter states that “because practices in other markets have been improving, investors have begun to re-evaluate the relative investment risks presented by corporate governance practices in the United States.
“To remain competitive in this environment, we believe the US must promptly embrace the reforms we have identified.”
The letter, signed by 28 investors, also called for the process of reform to be led by an appropriate US government entity, with the goal of implementing a best practice “comply or explain” disclosure requirement in 2010.
Peter Moon, chief investment officer at the USS, said: “The US has a system of corporate governance in which there is a misalignment between the interests of shareholders and directors.
“It is critical that the new administration understands that this has ramifications for how overseas investors view the integrity of the US markets.”
The letter comes after F&C Asset Management’s annual responsible investment report disclosed a higher level of votes against management recommendations at US firms than average.
Where it had opposed or abstained from management recommendations 14% of the time at companies it invested in globally, this figure rose to 24% in the US.
Its unhappiness with US companies often reflected contentious elections for individual board candidates and the backing of resolutions filed by minority shareholders who were critical of pay and management.
Elsewhere, F&C is pushing for financial regulators to bring in rules to support long-term sustainable growth in the financial sector and avoid systemic risk.
Karina Litvack, head of governance & sustainable investment at F&C, said: “The events of the last few months have confirmed that the soaring pay packages for top bank executives were driven by extraordinary risk-taking rather than real, sustainable profits.”
SHAREHOLDER DEMANDS FOR US COMPANIES
■ Shareowner access to proxy voting
■ Standard majority voting for election of corporate directors
■ Split chair/CEO roles
■ Advisory shareholder votes on executive remuneration
■ Repeal of the authority for brokers to vote uninstructed shares
■ Stronger rules on clawing back illicit executive compensation
■ Limits on the use of conflicted remuneration consultants
■ Restrictions on severance payments rewarding poor performance
