The Association of British Insurers (ABI) has recently published its paper “Collective Engagement Investor Exchange”, giving details of how its Investor Exchange mechanism, one of the means of improving shareholder engagement suggested in its July 2013 report on Corporate Governance and Shareholder Engagement, will work in practice.

Invitations to meetings set up between the ABI and a company can be extended to non-ABI members who are significant investors in the company (top 10 shareholders or holders of 1% or more of the share capital). Chatham House rules will apply – all parties will be asked to sign a confidentiality agreement and “there is no requirement or expectation that a public position be adopted”. There will be a post-meeting discussion on the institutions’ take on the things that the company has said at the meeting, following which the company will be sent a letter setting out what is expected of it and any areas of concern.

So far, so good, but this mechanism conjures up some intriguing scenarios. If a company has a fight with its shareholders over a remuneration issue, will this have to remain under wraps until the company publishes the reasons for a substantial vote against its remuneration policy at the AGM? And could it be that the very general statements about performance conditions published by various investor representatives like the ABI (“performance measures and vesting conditions should be … clearly linked to the achievement of appropriately challenging financial performance which will enhance shareholder value”) hide a multitude of different strongly-held opinions of its members about what those performance measures should (or, as importantly, should not) be? If so, companies and investors can engage collectively and exchange all they like, but just taking their public statements as a start point, they won’t find it easy to come to a consensus on such fundamental things as what performance conditions should look like …. It’s kind of collective bargaining, just without the “collective”!