New York City funds in positive engagement over clawbacks at banks

Withdrawal of shareholder proposal follows “informative and productive” discussions

The five New York City pension funds have had a “positive” response to their shareholder proposals on clawbacks at investment banking giants Morgan Stanley and Goldman Sachs.

The funds have withdrawn planned motions on the issue for the banks’ forthcoming annual shareholder meetings following “informative and productive” discussions with the companies.

“We are pleased that Morgan Stanley has recently taken steps to strengthen its clawback provisions and has agreed to provide shareholders with added disclosure to clarify the breadth of the scope of these provisions,” the Comptroller’s office said in correspondence. It added the provisions permit recovery of compensation for “failure to appropriately supervise or manage an employee”.
The letter was sent by Michael Garland, Executive Director for Corporate Governance in the Comptroller’s office to company secretary Martin Cohen.Similar exchanges took place between Garland and Goldman’s Vice President of Investor Relations, Bess Joffe. Joffe is a former engagement executive at Hermes Equity Ownership Services who joined Goldman in 2010.

Morgan Stanley and Goldman had both previously sought approval from regulators at the Securities and Exchange Commission (SEC) to omit the funds’ proposals from the agenda of their AGMs – the so-called ‘no-action’ approach.

The five funds – the New York City Employees’ Retirement System, the New York City Fire Department Pension Fund, the New York City Teachers’ Retirement System, the New York City Police Pension Fund, and the New York City Board of Education Retirement System – have combined assets of $115bn (€90bn). Meanwhile, New York Comptroller John Liu has renewed his call for Bank of America, Citigroup and Wells Fargo to conduct independent audits of their mortgage and foreclosure practices.