U.K. Investment Body Issues Rebuke on Aston Martin Board

(Bloomberg) -- An influential body representing the U.K. asset management industry issued a rebuke to Aston Martin Lagonda Global Holdings Plc after the luxury automaker lost all its female directors, a person with knowledge of the matter said.

The London-based Investment Association put out a so-called red top report on Aston Martin ahead of its annual general meeting Wednesday, according to the person. The report criticizes Aston Martin for its all-male board and cites a lack of diversity on its executive committee, the person said, asking not to be identified because the information is private.

Aston Martin's three female directors all left the board in recent months. Canadian billionaire Lawrence Stroll became executive chairman in April, replacing Penny Hughes, after leading a bailout of the sports-car manufacturer. The other women on the board, Imelda Walsh and Tensie Whelan, previously said they wouldn't stand for re-election and formally stepped down May 23.

The Investment Association's members manage more than 7.7 trillion pounds ($9.7 trillion) of assets, according to its website. The body issues such reports through its research arm, the Institutional Voting Information Service.

Aston Martin shareholders approved most motions at Wednesday's shareholder meeting nearly unanimously. About 5% of votes were cast against Stroll's election to the board. The appointments of three other directors were also opposed by between 4% and 6% of investors at the meeting, the company said in a regulatory filing.

Governance Norms

“It's important to shine a spotlight on companies like Aston Martin who have restructured their board without any women,” said Denise Wilson, chief executive officer of the Hampton-Alexander Review, which lobbies for increased female representation on U.K. boards. “These are not the expectations of anybody for a publicly listed company.”

Digital services provider Kainos Group Plc and property investor Daejan Holdings Plc were the only members of the benchmark FTSE 350 Index with all-male boards last year, according to a November report from the Hampton-Alexander Review. Since then, Kainos has appointed a female director and Daejan has been taken private.

Aston Martin said in February it recognized its board composition wouldn't be fully in line with U.K. corporate governance norms after the investment from Stroll's consortium. The company only accepted the lack of compliance to support the capital raise and understands that “significant focus and effort” will need to be applied to the issue, it said in a filing at the time.

An Aston Martin spokesperson said “this is a particular focus for Mr. Stroll as incoming Executive Chair and his priority is to ensure the right balance of skills and experience to support the company in delivering its long-term potential.” The spokesperson added that Aston Martin was recruiting additional independent non-executive directors.

Ousted Chief

Proxy advisory firm Institutional Shareholder Services Inc. had recommended “qualified support” to Aston Martin's proposed directors. The impending lack of balance on the board is largely due to Stroll's investment in the company, and Aston Martin plans to fix the situation “as soon as practically possible,” ISS said in a report before the AGM.

Aston Martin's biggest institutional shareholders include Fidelity Investments, which owns nearly 3%, and Invesco Ltd., which holds about 2%, according to data compiled by Bloomberg. Vanguard Group Inc. and Hargreaves Lansdown Asset Management Ltd. each have about 1.2%, the data show.

In May, Aston Martin ousted CEO Andy Palmer and named Tobias Moers, who leads Daimler AG's Mercedes-AMG performance division, as his replacement.

Palmer, who joined Aston Martin from Nissan in 2014, had been focused on the introduction of the pivotal DBX, a $189,000 sport-utility vehicle at the heart of Aston Martin's comeback strategy. The company is banking on the model selling in higher volumes than the iconic sports cars made famous in the early James Bond movies.