RI Governance & Engagement, July 7: ISS launches annual policy consultation

RI’s regular review of governance and engagement news

Institutional Shareholder Services (ISS) has launched its annual global policy formulation process. It has invited its institutional investor clients and industry constituents to participate in its 2011 proxy voting policy survey, which runs until August 3; it will be followed in October by an open comment period after which ISS will publish draft policies.

A group of four US pension funds – the Policemen’s Annuity & Benefit Fund of Chicago, the Westmoreland County Employee Retirement System, the City of Grand Rapids General Retirement System and the City of Grand Rapids Police and Fire Retirement System – have challenged Bank of America’s $8.5bn mortgage-related settlement with investors. They fear the deal may provide some investors with an inappropriate “windfall”, according to a Reuters report.

One of the City of London’s most senior regulators has hit out at the bosses of financial firms for failing to embrace the cultural change needed to repair the industry’s reputation with consumers. Margaret Cole, director of enforcement and financial crime at the Financial Services Authority, recently told a City audience that the standards of the financial services industry would not be tolerated in other businesses. “If a supermarket sold rotten food to its customers, how long would it stay in business? Cole was launching the Financial Conduct Authority (FCA), which is to be spun out of the FSA next year.

The Ontario Securities Commission has announced a review of Ontario-listed companies that have “significant business operations in emerging markets”. The probe is part of the OSC’s effort “to protect investors and strengthen market integrity” and comes in the wake of the Sino-Forest scandal.

US business group The Conference Board has formed a committee on disclosure and accountability of corporate political spending. It is co-chaired by Dan Bross, Senior Director, Corporate Citizenship at Microsoft and Charles Grezlak, Vice President of State Government Affairs at Merck & Co.The European Parliament has backed – by 534 votes to 109 – a non-binding resolution calling for women to make up 30% of top management in the largest listed EU companies by 2015 and 40% by 2020. “If voluntary measures fail to boost the number of women in senior positions, EU legislation must be used,” the body said in a statement.

The European Securities and Markets Authority has started its review of proxy advisory firms, according to a report from Financial News. FN said the watchdog has sent out a questionnaire to industry players and that it is in dialogue with the US Securities and Exchange Commission about regulation.

Shareholders and boards “must make a new commitment to compensation truly tied to performance” says Phil Angelides, the chair of the Financial Crisis Inquiry Commission, which investigated the financial and economic crisis. Writing in the Financial Times, Angelides was looking at executive pay on Wall Street.

Blackberry maker Research in Motion and NEI Investments have announced in a joint statement that the asset manager has decided to withdraw its proposal seeking a separate chairman and CEO function, which was tabled for RIM’s annual general meeting. RIM will instead set up a committee of independent directors. But proxy firm Glass Lewis said the move indicates RIM is avoiding a commitment to an independent chair.

Governance for Owners’ Simon Wong has argued in new research on board performance that behavioural and functional considerations have hampered board effectiveness. The study is called Elevating Board Performance: The Significance of Director Mindset, Operating Context, and Other Behavioural and Functional Considerations.

Proxy advisory firm PIRC has recommended that shareholders vote against the remuneration report at luxury goods firm Burberry’s annual meeting on July 14. In the spotlight is a one-off £5.8m share payment to chief executive Angela Ahrendts.