RI Governance & Engagement, Nov. 24: New engagement on Canadian oil sands

The regular round-up of governance and engagement developments

SHARE, Canada’s Shareholder Association for Research and Education, is engaging with companies active in oil sands extraction in Alberta. It has written to Canadian Oil Sands Ltd. and Suncor Energy requesting information on tailings management. “Both companies have confirmed receipt of our request for information and have indicated that a response will be forthcoming,” SHARE said in its third-quarter engagement report. Link

The California State Teachers Retirement System (CalSTRS) has welcomed the appointment of its long-standing corporate governance partner Ralph Whitworth, the head of fund firm Relational Investors, to the board of computer firm Hewlett-Packard. The fund, which has a $254.9m stake in HP, said it was a “serious first step” towards allaying concerns about HP’s governance, board composition and performance.

New Dutch legislation for listed companies that comes into force at the start of next year will encourage board diversity and call for at least 30% female directors, according to consulting firm Towers Watson, which is hosting a briefing on the subject in Amsterdam on December 6.

A new Corporate Governance Model Board Charter has been developed in Zambia. Bank of Zambia Deputy Governor Bwalya K E Ng’andu presented the charter to financial sector stakeholders in Lusaka last month. It focuses on the role of Boards of Directors occupy and “how their role, functions and operations may be reduced into a charter that might guide their work”.

Investors including the California Employees’ Retirement System (CalPERS) and Blackrock have reached an undisclosed settlement in their credit crisis-related Countrywide case against US banking giant Bank of America, according to a Reuters report. The investors had earlier decided not to join a $624m class action case.

Institutional Shareholder Services, the proxy advisory firm, has revised its US pay-for-performance policy. The new approach will provide clients with a “more robust view” of the relationship between executive pay and company performance over a sustained time horizon, in response to client and company feedback.Hermes Equity Ownership Services says it is having “individual dialogues” with banks over the issue of how ‘phantom profits’ distort pay. “We expect all bank remuneration committees whose reported income is distorted by [the IAS 30 accounting standard] to exclude these phantom profits from calculations for pay purposes, so that bonuses and other incentive pay are not subject to the same distortion,” said Hermes EOS Chief Executive Colin Melvin in a letter to the Financial Times.

US pension fund the Erie County Employees Retirement System has begun a federal class action alleging “excessive and improper” executive pay practices at oil-drilling giant Nabors Industries, according to reports. The board has for years “systematically ignored its shareholders with respect to the company’s executive compensation practices”, according to the complaint, quoted by Courthouse News

US union pension funds, the St. Louis-based $143m Plumbers & Pipefitters’ Local 562 and Connecticut’s IBEW Local 90, have started a class action lawsuit against investment banks J.P. Morgan Chase and Goldman Sachs Group, according to a report in Pensions & Investments. The case is over claims the banks made misleading statements about the exposure of failed brokerage house MF Global Holdings’ shares to European sovereign debt.

Okapi Partners, the New York-based proxy advisory firm, is predicting more shareholder activism next year. Chief executive Bruce Goldfarb told Corporate Secretary in an interview that activist investors are “taking very close looks” at companies with a view to nominating directors for election in 2012.

Compensation consulting firm Pay Governance has found there is a “strong alignment” between chief executives’ pay and stock price performance. The firm reviewed nearly the proxy filings of nearly 400 companies. “Contrary to claims made by compensation critics, there is a very strong relationship between pay and performance as reflected through realizable pay,” said Pay Governance managing partner Ira Kay. Link

The SEC has issued new guidance on some key shareholder issues ahead of the 2012 proxy season. SEC Staff Legal Bulletin No. 14F, clarifies the shareholder proposal process with updates on proof of share ownership for beneficial owners, submission of revised proposals, and withdrawal of a proposal submitted by multiple proponents.