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Proxy vote records highlight greatly increased deference on key environmental, social and governance issues
Vancouver (3 February 2009) – The Shareholder Association for Research and Education’s (SHARE) eighth annual Key Proxy Vote Survey has found a significant increase in investment managers’ willingness to support corporate management’s recommendations at the ballot box. The survey findings, released last week, sit awkwardly with continued revelations about lax corporate oversight and its ramifications for the global economy.
“In Canada, we knew there were serious problems with a negative impact on investment returns before the proxies were voted in 2008,” says SHARE’s Director of Law and Policy, Laura O’Neill. “ABCP investments had soured and huge write-downs were being taken by companies in the financial sector. The response from private sector pension fund money managers appears to have been to require less of companies on governance.”
Every year, SHARE asks investment managers with Canadian pension fund clients about their voting decisions on a number of key issues that proved contentious in the most recent proxy season. For 2008, thirty-two firms representing $453 billion in pension assets participated in the voluntary survey. They were polled on 37 votes that appeared on the proxy ballots of Canadian corporations.
The investment managers averaged a score of 29% votes cast in accordance with SHARE’s responsible investment proxy-voting guidelines. This stands in sharp contrast to the lowest average recorded by SHARE in past surveys (44%).
“Last proxy season, a handful of surveyed voters maintained their vigilance on key issues. But others missed many opportunities to send a clear message to management when they voted for proposals that were not in shareholders’ best interests,” explains Peter Chapman, Executive Director of SHARE. “Similarly, firms were more reluctant than in previous years to support shareholder proposals that sought better corporate performance on environmental, social and governance matters.”
The survey questions and responses do not allow SHARE to examine the rationale behind the managers’ votes, so it is not possible to explain precisely why a retrenchment occurred in 2008. However, SHARE encourages pension fund trustees to sit down with the firm that votes their funds’ proxies and find out.
An encouraging trend from this year’s survey was an increase in the number of pension plans giving their proxy-voting agents (investment managers or proxy-voting service) direction on how their proxies should be voted. Less than two-thirds (63%) of survey respondents indicated that they exercised discretion for voting over the accounts of most of their pension clients. In 2006 and 2007, discretion was exercised by 77% and 71% of firms respectively. It is positive to note that fewer pension funds left their proxy-voting decisions to investment advisers, particularly in a year when those managers voted in-line with management much more often on key issues
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About SHARE: SHARE is a national social enterprise dedicated to improving institutional investment practices that protect the long-term interests of pension plan members, beneficiaries and society in general.