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RI Governance & Engagement, March 18: Renault facing shareholder resolution on CEO pay

RI’s regular review of governance and engagement news

French car giant Renault is facing a resolution on executive pay at its annual general meeting on April 29. The motion, from PhiTrust Active Investors, seeks to amend the company’s statutes and relates to the pay that Chief Executive Carlos Ghosn receives from Renault’s partner firm Nissan.

Korea’s KRW300trn (€190bn) National Pension Service says it will divest from casinos, cigarettes and other so-called “sin sector” firms, according to a report in the Korea Times. Chairman Jun Kwang-woo was quoted saying the fund is reviewing ways to implement environmental, social and governance (ESG) factors into the investment process.

The new Irish government plans sweeping changes to its corporate governance regime. The coalition agreement states: “We will make good corporate governance the law, not an optional extra, and enact legislation to provide for binding code of practice for corporate governance, which will be obligatory for companies wishing to be listed on Irish stock exchange.”

The Hong Kong Stock Exchange’s consultation paper on corporate governance practices and associated listing rules ended today. The exchange launched the review in December, saying an update to the 2005 Code was warranted by changing market conditions.

A new South African Companies Act – including further corporate governance provisions – is a step closer. The government announced that the Companies Amendment Bill has been adopted by the Portfolio Committee on Trade and Industry. “This paves a way for the changing phase of doing business in South Africa, which will bring SA in line with and even beyond international trends in some respects,” it said.

The $480m (€342m) Norfolk County Retirement System, a Massachusetts pension fund, is lead plaintiff in a shareholder class action against US health providers RehabCare and Kindred Healthcare. The action relates to the firms’ merger plans announced last month. The case is pending in the Delaware Court of Chancery. Link

A new government-backed report in the UK has called for institutional investors and their trade bodies to address the “perception and the reality” of disproportionately paid corporate executives. The report by former journalist Will Hutton calls on them to rework his proposed public sector pay framework.UK asset manager F&C Investments says it opposed management at 18% of its AGM votes in 2010, up from 10% in 2009. Its votes in favour of management declined to 72% from 78%, according to its annual Responsible Investment Report.
Coffee giant Starbucks is among a number of US firms identified as “high concern” by the latest GovernanceMetrics Executive Pay Scorecard. Others flagged include entertainment firm Viacom Inc. and healthcare products provider Covidien plc. Low concern companies include Apple, Deere & Co. and Fastenal Co. Link

Henderson Global Investors had over 120 engagements with companies on environmental, social and governance issues in 2010, according to the annual review of its Industries of the Future fund. Examples of successful engagement included Schneider Electric (ethics) and East Japan Railway, Emerson Electric and NetApp (carbon management).

Shareholder activism in France is increasingly being influenced by networks of hedge fund investors and other specialized players which have “professionalised” activism in the last few years. That’s the theme of a note by Matteo Tonello, Director of Corporate Governance for The Conference Board.

US law firm Latham & Watkins has released commentary asking whether the success of the current corporate governance voting model “carries within its own seeds of destruction”. “Apotheosis or apogee is the question for the proxy advisory industry and, more generally, the institutional investment world.”

Teamsters Local 237 Additional Security Benefit Fund has sued Beazer Homes USA Inc.’s directors over executive compensation, according to a Bloomberg News report. Pay rises “violated the company’s pay-for-performance policy” the complaint filed in Fulton County Superior Court states.

Institutional Shareholder Services, the US proxy advisory firm that’s now part of MSCI, has produced a book to commemorate its 25th anniversary. “ISS invited 25 experts — drawn from all sides of the governance debate and from every corner of the globe — to offer their perspectives on the quarter-century that has passed since ISS was founded in 1985.”