Investors called on to give boardroom leaders greater scrutiny

* Very few directors rejected at AGMs

* Alliance Trust, VW, Vivendi (Swiss: VIV.SW - news) all raising investor ire

By Simon Jessop and Sinead Cruise

LONDON, April 23 (Reuters) - After taking top executives to task over excessive pay and bonuses, investors are slowly turning their attention to the role of the chairperson, as concern about weak governance grows.

As the person responsible for hiring and firing the chief executive and ensuring company strategy is on track, the chair is crucial to protecting shareholder returns over the long term, even though few ever find themselves rejected at the company's annual meeting.

But as pension funds and other long-term asset owners demand investment firms be more active stewards of their stock, some money managers are reconsidering how they rate chairpersons, with a view to making them more accountable for company performance.

"I'm not sure shareholders as a whole are particularly good at that. I think there's a little bit of an unwillingness to take a view on individuals and, frankly, I think we need to do that more," said Paul Lee, head of corporate governance at Aberdeen Asset Management (Other OTC: ABDNF - news) .

UK fund firm trade body the Investment Association and consultancy EY recently launched a report calling for investors to engage more in how companies are run, including around the 'lynchpin' chair role.

"The majority of chairmen understand the role but we sometimes find the board doesn't intervene as quickly as we would like. They sometimes give the benefit of the doubt," said Shade Duffy, head of corporate governance at AXA Investment Managers, the fund arm of French insurer AXA (Paris: FR0000120628 - news) .

"That's why we think it's important for chairmen to have a good relationship with investors, so they can access what markets think about the performance of the company and executives."

COUNTRY BY COUNTRY

Investor (Stockholm: INVE-A.ST - news) willingness to voice displeasure at a chair during the annual meeting, at which pay deals, board composition and other plans are rubber-stamped, differs from country to country.

In Britain, which leads the world in many aspects of governance, concerns with the chair are usually raised behind closed doors as part of an 'engagement' approach. Chairs in continental Europe, meanwhile, can be much less responsive.

National differences in the way boards are run can make it difficult for investors to influence company leadership in the same way. In France, for example, the CEO and chair are more often one and the same person, while in Germany the CEO leads the management board and the chair heads up the supervisory board.

But the need to make good decisions about those in charge is clear, said Hans-Christoph Hirt, director at investor advisory service Hermes EOS.

"We do not want to be running a company but we do want to make sure the right people are. Too much of our time is eaten up by talking about remuneration rather than the people on the board," he said.

Recent examples of corporate governance issues rattling investors include that of German carmaker VW, where Chairman and key shareholder Ferdinand Piech's public attack on the performance of the firm's CEO sparked a 10 percent slide in the company's share price.

In France, meanwhile, media company Vivendi's chairman, chief executive and biggest shareholder Vincent Bollore (Other OTC: BOIVF - news) has tightened his grip on the company by securing double voting rights despite just over half of shareholder votes being cast against the motion.

While still early days for the 2015 annual general meeting season in Britain, there have also been some high-profile 'oppose' recommendations made by shareholder advisory firms, including one against Chairman Douglas Flint at lender HSBC ahead of Friday's AGM, amid concerns over his executive duties.

Recent history, however, shows the bar for most investors to vote against a chair has been set pretty high, reflecting concerns that a heavy vote against management could hurt the share price.

"Voting is an important tool but the discussions you have with a chairman six to nine months or so before an AGM are much more important," Hirt said.

Data from shareholder advisory firm Manifest showed just 134 of more than 15,000 director elections or re-elections at the UK's 350 biggest firms had received dissent equal to or greater than 30 percent of the votes in the five years to Jan. 2015.

Just 15 resolutions had 'against' votes of more than 50 percent of the votes cast.

"It's a very rare occurrence for a chairman to be voted off," said Sarah Wilson, at Manifest. "A chairman would probably leave rather than face a negative vote ... voting against a chairman is a nuclear option." (Editing by Greg Mahlich)