Norwegian pension fund meets resistance in US shareholder rights campaign

Norges Bank Investment Management, the arm of the Norwegian central Bank which manages the assets of the NOK3.4trn (€442bn) Government Pension Fund, is meeting resistance from companies in its attempt to boost shareholder rights in the US.

Norges launched a bid last year to gain shareholder rights to nominate director candidates at six major US companies. It filed shareholder proposals for so-called proxy access at Wells Fargo, Charles Schwab, Western Union, Staples, Pioneer Natural Resources and CME Group on November 22.

It was the first time the giant fund had ever filed proxy access proposals, evidence of the increasing importance it puts on shareholder rights – one of its six areas of strategic focus.

It argued at the time that the right to nominate candidates to the board of publicly listed companies is a “fundamental principle” of good corporate governance. Its proposal stipulates investors must have a 1% shareholding for a year before they are allowed to nominate directors.

Now it’s emerged that at least one of the target companies, New York-listed money transfer companyWestern Union, is seeking approval from the Securities and Exchange Commission to omit Norges’ motion from the ballot for its next shareholder meeting – a “no-action” request.
In a letter to Norges’ lawyers Grant & Eisenhofer, Western Union says it plans to table its own resolution on proxy access, albeit with a much higher 5% shareholding threshold for three years, putting the two proposals in “conflict”. And its lawyers also argue that Norges’ proposal is “false and misleading” because a web link mentioned by the investor doesn’t work.

Western Union intends to file the final agenda for the shareholder meeting in early April – with the meeting itself likely to take place in May.
US law firm Davis Polk said it believes the SEC is likely to grant Western Union’s no-action letter request – but said it was interesting that the company and others have responded to the proposals.
“Even at these higher ownership thresholds, supporters of proxy access may still view these actions as quite positive in response to the first year that proxy access shareholder proposals have been submitted, when none have been voted on yet,” it said in an analysis.