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Red letter week as investors face down BP and UBS

Two major AGM battles on the horizon

This week two separate but high-profile battles are set to take place at the annual general meetings of major European companies. The AGMs of oil major BP and Swiss banking giant UBS have the potential to set the tone for shareholder engagement.
At stake are investor unity in the face of company management, the role of advisors and the differing approach of local and international investors.
First on the agenda is the UBS meeting in Basle on April 14. The bank is facing a revolt led by Ethos, the influential Swiss sustainable investment group, which plans to oppose its board remuneration report and a proposal by UBS to ‘discharge’ its current directors from any role in the crisis that led to UBS being bailed out by the Swiss state.
Ethos principal Dominique Biedermann told the NZZ am Sonntag this weekend that large Swiss pension funds will follow his recommendations, in particular on rejecting the ‘discharge’ proposal. “To date, we have not yet heard of one single pension fund that is in favour of dismissing responsibilities for 2007,” Biedermann told the paper. He added that advisors ISS (RiskMetrics) and Glass Lewis are of the same opinion and that ISS has also recommended voting against the new UBS bonus system.
The following day, April 15, will see the focus shift to the UK, where BP is holding its AGM. The hot topic is the tar sands issue, prompted by the investor coalition chaperoned by Fair Pensions calling for a full assessment of the environment and financial risks of the firm’s tar sands project in Alberta, Canada. Investor unityon the topic was broken when the Local Authority Pension Fund Forum declared itself in favour of the company.
The BP board recommends that shareholders oppose the resolution. It directs shareholders to a three-and-a-half page document on its website outlining the reasons it opposes the resolution. The project, it says, is “no different to any other BP investment decision”.
Tar sands has also shown up UK/US investor engagement fault lines. With US funds such as CalPERS, CalSTRS, the Connecticut Retirement Plans & Trust Funds (CRPTF), New York State Common Retirement Fund and the Vermont State Teachers’ Retirement System planning to vote for the Fair Pensions resolution – in marked contrast, says Lauren Compere, managing director of Boston Common Asset Management – with UK investors who have stated they will either abstain or vote with management on the resolution proposal.
The latest UK pension fund to back the shareholder resolution against BP is the Environment Agency. It said: “In our view companies need to be more transparent to their shareholders with respect to their long term strategies and decision making on the exploitation of non-renewable natural resources such as tar sands.
“We have therefore decided to vote FOR the shareholder resolutions at the Annual General Meetings of BP and Shell that call upon these two companies to undertake additional economic and environmental risk assessments in respect of proposed extraction of oil from tar sands.”