RI Governance & Engagement, November 10: NBIM takes on Goldman over mortgage securities

RI’s regular review of governance news

Norges Bank Investment Management, the manager of the Norwegian Government Pension Fund, is among investors who have “threatened to assert claims” against Goldman Sachs over with various mortgage-related offerings, according to a filing from the investment bank. Goldman said it has “entered into agreements” with a number of these entities to toll the relevant statute of limitations.

The Investor Responsibility Research Center (IRRC) has found that corporate accountability and disclosure of political expenditures is rising, with the boards of 31% of S&P 500 companies now explicitly overseeing such spending, compared to 23% in 2010. But it found this does not necessarily translate into less spending. The study – “Corporate Governance of Political Expenditures: 2011 Benchmark Report on S&P 500 Companies” – was conducted by the Sustainable Investments Institute (Si2).

The Co-operative Asset Management (TCAM), the UK-based fund firm, won’t support directors at companies who fail to disclose targets for getting women on their boards. The investor said it would, in the first instance, abstain on re-electing nomination committee chairs if they fail to disclose aspirational targets for female board directors or who fail to elect any women to an all male board. “As far as we know we are the first investor to factor in gender balance to a UK voting policy,” the TCAM in its latest engagement review. Link
The Council of Institutional Investors, the non-profit association of US investors representing more than $3trn in assets, has scheduled a teleconference of its Activism Committee to focus on “lessons learned and next steps” for addressing corporate governance concerns at media giant News Corp and controversial oil drilling firm Nabors. The event takes place on November 16.
The CII has also published a guide for its members on international proxy voting. “The short primer discusses roadblocks US institutional investors face when voting shares in eight markets in Europe, Asia and Latin America.”The United States Proxy Exchange (USPX), the non-profit shareholder rights organisation, has released its model proxy access proposal. It is intended to provide a way for shareholders to participate in nominating directors. “The success of proxy access depends on experimentation to find what works,” says USPX Executive Director Glyn Holton.

The Committee on Workers’ Capital, the global coalition of labour union activists, has called for investors to take an active role in proxy voting in its new Proxy Review 2011 report. “This report will help the pension fund trustees who invest workers’ retirement savings overcome barriers in exercising … oversight,” said CWC Chair Ken Georgetti, who is also President of the Canadian Labour Congress.

Governance research firm GMI has launched the first of a series of Say on Pay reports, covering 456 S&P 500 companies. The analysis shows that 22.3% of companies have “high concern” pay practices. The worst companies are: Abercrombie & Fitch; Aetna, Moody’s; Nabors; Medtronic; Zimmer Holdings; Prudential Financial; Constellation Brands; Teradyne; and Yahoo!. Link

The OECD, the Organisation for Economic Cooperation and Development, has published a new report looking at corporate governance in China “through the prism” of the OECD Principles of Corporate Governance. Corporate Governance of Listed Companies in China shows that corporate governance has “improved significantly” since the Chinese stock market was created in 1990.

A look at how of conflicts of interest thwart institutional investors’ stewardship efforts has been put together by Simon Wong, the Governance for Owners partner who’s also Adjunct Professor of Law at the North-western University School of Law. If conflicts of interest are left unchecked, he concludes, “current efforts to promote active, long-term oriented stewardship behaviour among institutional investors will falter”. Link