

An unusual proposal filed by corporate governance activist James McRitchie calling for a proxy advisor competition at Cisco Systems was soundly defeated at the US tech giant’s annual meeting yesterday (November 19).
According to a published transcript of the meeting, approximately 99% of shares were voted against the proposal, although Cisco has not yet officially released the full voting numbers.
The idea is for the company to award cash prizes to the advisors that gave its shareholders the most useful advice in a bid to stir up the current proxy advisory market, dominated in the US by Institutional Shareholder Services (ISS) and Glass Lewis.
Speaking at the AGM, McRitchie – publisher of the CorpGov.net site – said proxy advisors take a “cookie cutter approach” to analysing companies. “With the proxy advisor contest all share owners would get multiple analysis and contestants would be incentivized to spend much more time on their efforts. Competition will result in better service.”
Cisco had advised its shareholders against backing the proposal saying it would force it to spend company resources on an activity unrelated to its business operations and which is “the business of our shareholders”.“The structure and health of the proxy advisory market is not our business focus, nor should it be; our shareholders determine if they wish to have advisors and which advisor they wish to have.”
Cisco said it was more appropriate for its shareholders or regulators to address any deficiencies in the proxy advisory market. It was also wary of being seen as interfering in its shareholders’ choice of proxy advisors.
According to voting disclosures, a range of major institutional investors voted against the McRitchie motion.
“PGGM questions the use of such a competition”
These included Norges Bank Investment Management (NBIM), PGGM, Canada Pension Plan Investment Board, the California State Employees Retirement System (CalSTRS), the Ontario Teachers Pension Plan and the Florida State Board of Administration.
PGGM said: “Although the idea of organizing a proxy advisor competition is to some extent admirable, PGGM questions the use of such a competition to shareholders and costs associated with such an event. For this reason we vote against this proposal.”