The $149.2bn (€112bn) Florida State Board of Administration has brought all of its global proxy voting activities in-house and away from its external asset managers following a shift to a combined global equity portfolio structure.
It restructured in fiscal year 2011, changing from a domestic/foreign equity structure to a single global portfolio with a heavier international equity weighting. “Coinciding with this shift, the SBA realigned its international voting practices, bringing foreign voting decisions in-house to match domestic SBA voting practices,” the SBA said.
Previously, the SBA’s external managers had been responsible for voting international proxies, which are now handled by SBA staff using research from advisors Glass Lewis, GovernanceMetrics International (GMI) and MSCI Institutional Shareholder Services. In 2011 it trialled UK-based Manifest Information Services for US large-cap firms. It also draws on research from Conflict Risk Network (CRN), IW Financial, Jantzi Sustainalytics, MSCI ESG Research and Equilar.
Before the shift, the SBA tapped GMI to evaluate the external managers’ voting. “While the managers adhered to responsible voting practices, it was natural to find that among the sample of managers a variety of voting strategies were in place.”The SBA says international voting will help it to improve global corporate governance standards. Its increasing international focus is reflected in the fact that it submitted a response to the European Commission’s corporate governance green paper, where it affirmed its support of the ‘comply-or-explain’ approach.
The shift to global voting has created a “general change in mindset” the SBA says in its new Corporate Governance report. “Voting in 80 different countries, with 80 different sets of governance practices, now means that special cases predominate.” The volume of voting also “eliminates any notion” of a proxy ‘off-season’.
During the 2011 fiscal year the SBA made just over 56,000 individual voting decisions – going against management 20.1% of the time, down 5% on 2010.
The SBA supported 88.9% of shareholder resolutions asking companies to publish sustainability reports and 61.5% of those on greenhouse gas emissions.
It is also involved with a new service corporate governance service called Sharegate, which is currently under going beta testing.