A series of key corporate governance proposals from institutional investors such as CalPERS and the New York City Pension Funds passed at the annual meeting of gas producer Chesapeake amid a shareholder revolt at the controversial company, which has become mired in scandal.
The five New York City funds’ proposal on proxy access, which would allow long-term shareholders a voice in nominating directors, passed with 60% shareholder support.
The California Public Employees’ Retirement System’s motion calling for the end of “supermajority” voting also went through, with the support of 86% of votes cast.
“These kinds of results feel like a new dawn of shareholder authority,” said Paul Hodgson, Senior Research Associate at GMI Ratings, the corporate governance research firm.
A proposal on political lobbying expenditures tabled by the Service Employees International Union (SEIU) and the Unitarian Universalist Association of Congregations gained a creditable 36% support.
Activist investor Gerald Armstrong’s call for the company to be re-incorporated in Delaware passed with 53% backing.
The only two directors up for election, Burns Hargis and Richard Davidson, gained just 26% and 27% support respectively and have tendered their resignations.New York State Comptroller Thomas DiNapoli, trustee of the New York Common Retirement Fund, and New York City Comptroller John Liu, trustee of the New York City funds, had separately written to shareholders urging them to withhold their support from the duo.
Proxy firms Glass Lewis and ISS, Institutional Shareholder Services, had also recommended withholding support.
CalPERS had rallied fellow investors with a May 14 letter calling for their support for its supermajority proposal.
Dutch pension giant PGGM said it withheld its votes on Hargis and Davidson “for failure to provide independent oversight of management, and for failure to respond in a timely manner to shareholder mandates on governance and compensation issues”.
Shareholders also rejected the company’s executive officer pay plan, with only 20% backing the advisory measure. PGGM noted the “continued misalignment” between CEO pay and company performance.
DiNapoli said the AGM result was a “rebuke” to the failed leadership of Chesapeake’s board.
He added: “The board should take immediate steps to implement the shareholder proposals that passed today, including proxy access and the elimination of supermajority voting.
“The days of an entrenched and unaccountable board structure at Chesapeake must be numbered.” Chesapeake voting results