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RI Governance & Engagement, August 4: MSCI’s governance segment earnings slip 7.7%

RI’s regular round-up of governance and engagment developments

MSCI’s governance earnings – comprising its proxy advisory services – slipped in the second quarter by 7.7% to $7.4m (€5.22m) on an adjusted EBITDA basis compared to the 2010 quarter, according to its earnings report today. Revenues in the segment fell 4%, or $1.3m, to $31m. Overall, MSCI posted a 90% increase in net income to $45.7m in the quarter; operating revenues were up 81% at $226.5m.

The United States Proxy Exchange, a non-profit organisation dedicated to facilitating shareowner rights, has launched a set of standards for say-on-pay voting. “For shareowners, say-on-pay is a Gordian Knot,” USPX says. “If shareowners can reasonably assess compensation packages – untangle the knot – they will have a tool to put the brakes on absurd executive compensation.”

The California State Teachers’ Retirement System has called on News Corp.’s board to show more independence in the wake of the phone hacking scandal, according to a Bloomberg report. It quoted a CalSTRS spokesman as saying the board “may need to step in and exercise their fiduciary duty and do right by shareholders”.

Bulgaria’s National Corporate Governance Commission has approved the methodology for calculating its new governance index, the CGIX (Corporate Governance IndeX). The seven-member index will comprise publicly traded companies applying corporate governance principles. The index will be market capitalization weighted and is planned to go live on September 19. Link

The Association of British Insurers, the trade body, is to issue new guidelines in the autumn to get firms to put more women on to their boards, according to a report in the Financial Times. The guidelines will also call on boards to improve succession planning and board evaluation, the report said. The ABI made the remarks in a letter to the Financial Reporting Council watchdog.

Average support for social and environmental resolutions during the US proxy season reached 21%, according to analysis from consulting firm Ernst & Young. It found that about 40% of all resolutions that went to a vote concerned environmental and social issues, up from 31% in 2010. This is the second year in a row that such motions accounted for the largest portion of shareholder proposals voted on.The Kay Review of UK equity markets and long-term decision making has appointed Chris Hitchen, chief executive of the £19bn (€22bn) Railways Pension Trustee Company (Railpen), to its Advisory Board. The board, which also comprises former Rolls-Royce CEO Sir John Rose and Baillie Gifford Partner James Anderson, will examine the investment chain – from company boards, through pension advisers and fund managers, to the ultimate beneficiaries. Hitchen is a former Chairman of the National Association of Pension Funds and the Institutional Shareholders Committee.

Pax World Management, the investment adviser to Pax World Funds, has disclosed how it voted on gender equality and women’s empowerment resolutions during the recent proxy season. It said it withheld votes from, or voted against, 264 director slates for insufficient gender diversity. “Pax World believes that gender diversity at all levels is a significant indicator of well-managed companies,” Pax World said.

A group of major institutional investors are suing Bank of America, alleging securities fraud in mortgage lending at the bank’s Countrywide subsidiary. “These prominent institutional investors made every effort to amicably resolve their claims for recovery of damages caused by the massive and pervasive fraud at Countrywide without filing formal litigation, but were unsuccessful,” said the investors’ law firm, Bernstein Litowitz Berger & Grossmann. The investors include CalPERS, Norges Bank Investment Management, Royal Mail Pension Plan, PGGM, and T. Rowe Price among others.

Canada’s Shareholder Association for Research and Education (SHARE) has released a report looking at the issue of precarious employment among commercial building service workers such as cleaners, maintenance staff and security personnel. Despite some progress, there is still some way to go, find the study Cleaning up: An Assessment of Responsible Contracting and Procurement in Canada’s Commercial Real Estate Sector.

Web analysis firm SourceAsia has released an analysis of its InvestAssure corporate responsibility web monitoring service. It noted that more than 1,000 alerts were sent to our clients, covering 520 companies. Chinese firms accounted for more than 50% of all alerts.