RI Governance & Engagement, March 11: Latest legal moves in US proxy access battle

RI’s regular review of governance and engagement news

The final reply brief has been filed by lawyers for the Business Roundtable of America and the US Chamber of Commerce in their battle against the Securities and Exchange Commission’s new proxy access rules. They argue the plan will “disenfranchise the vast majority of shareholders, who may wish to avoid the tremendous costs that proxy access would impose on their company”. Link

Hermes Equity Ownership Services and Germany-based corporate governance research firm IVOX have formed a strategic partnership to “provide a comprehensive and optimal support to pension and insurance funds and long-term oriented fund managers in protecting their interests as responsible and, where necessary, active owners of companies worldwide”.
The $125bn Florida State Board of Administration, with the assistance of the American Corporate Governance Institute, has tabled an AGM resolution calling for annual director elections at McDonalds, according to the fast food firm’s preliminary proxy statement. The SBA owns 2.5m shares in the company, which holds its annual meeting on May 19 at its Illinois headquarters. Meanwhile McDonald’s has announced its Sustainable Land Management Commitment, a bid to ensure its food comes from certified sustainable sources.

Swedish bank Skandinaviska Enskilda Banken is facing a shareholder proposal on remuneration – particularly the distribution between base pay and variable pay for senior executives – from share holder Thorwald Arvidsson. SEB holds its AGM on March 24.

Russian mining firm MMC Norilsk Nickel has said it will cut its sodium dioxide emissions. The firm, which was blacklisted by the Norwegian Government Pension fund in 2009 for environmental damage, has issued an international tender for SO2 reduction technology.

Canadian investors the British Columbia Investment Management Corporation (bcIMC), the Canada Pension Plan Investment Board (CPPIB) and Northwest and Ethical Investments have made a joint shareholder proposal on majority voting for uncontested director elections at Sino-Forest Corp. Sino-Forest is a Toronto-listed commercial forest plantation operator in China.

Separately, NEI has met with the Chair of the Compensation Committee at ScotiaBank regarding its proposal calling for the disclosure of targets used in executive pay but has “not been able to reach an agreement”. The current status, according to its resolutions tracker, is that NEI will attend the bank’s AGM on April 5.US industrial group United Technologies Corp. is facing a shareholder resolution from the AFLCIO Reserve Fund for its annual meeting on April 13. The fund is calling for a lockup period of five years for executives to retain shares acquired through equity compensation plans. The board is recommending shareholders to vote down the proposal. Link
Newton Investment Management conducted 91 environmental, social and governance (ESG) assessments in 2010, according to its fourth-quarter Responsible Investment, Corporate Governance and SRI report. The process resulted in Newton identifying around a third of these companies for engagement.

Investor AB, the Swedish industrial holding company, is facing a shareholder resolution from a hedge fund at its Annual General Meeting on April 12. HBK Master Fund LP wants the company to amend its Articles of Association to allow for the voluntary conversion of Class A shares into Class B shares.

KLP’s Head of Responsible Investments Jeanett Bergan has commented (Norwegian) on the scandal surrounding temporary employment agency Adecco in Norway, which is facing allegations of labour law violations. Adecco has promised to clean its house following the furore.

“Governance Fit for the Long Term” is the theme for the Yale Governance Forum, which is set for June 16-17. Some 200 leading institutional investors, corporate directors and executives, regulators, academics, corporate governance advisors etc. are expected to attend. Link

Proxy voting firm Manifest has a blog post mulling the potential unintended consequences of mandatory voting by shareholders. “It’s not the act of voting that’s important of course, it’s the quality of decisions the votes convey,” it argues.

An ethics hotline has been set up for hedge funds. New York-based “business investigations” firm Corporate Resolutions says its an “ideal way to prevent fraud, insider trading and other forms of wrongdoing and show pension funds, fund-of-funds (FOFs) and other investors that hedge funds, like other firms, strive for ethical transparency”.

Pioneering shareholder activist Robert AG Monks has set up a new web site. Monks is the author of numerous books and was a founder of Institutional Shareholder Services (ISS).