RI Governance & Engagement, Sept. 29: Ethos calls for removal of UBS chairman

RI’s regular review of governance and engagement news

The Ethos Foundation, the advisory firm owned by Swiss pension funds, has called for the resignation of UBS Chairman Kaspar Villiger in the wake of the rogue trading scandal which has already taken the scalp of former CEO Oswald Gruebel. “What the bank needs now is a strategy, and Mr Villiger is not the right man to do that,” Ethos Director Dominique Biedermann told the Financial Times.

The Association of British Insurers has revised its principles of executive remuneration. The guidance stresses that firms should “strongly resist” payment for failure and that boards should understand that excessive pay undermines company efficiency, affects reputation and is not aligned with shareholder interests. The ABI has also released its first report on Board Effectiveness, covering board diversity, succession planning and board evaluation.

A proposal from the Comptroller of the City of New York calling for shipping firm FedEx to disclose its corporate political spending was defeated at the company’s annual shareholder meeting this week. A motion from the International Brotherhood of Teamsters General Fund calling for an independent board chair was also defeated, although the company did not disclose voting numbers.

Bank of America will “most likely try to settle” the litigation brought by various pension funds over its troubled purchase of Merrill Lynch at the height of the financial crisis, according to analysis in the New York Times. Professor Steven Davidoff (the ‘Deal Professor’) writes that the case is on a relatively fast track, with an October 2012 trial date. The funds involved include Ohio Public Employees Retirement System, State Teachers Retirement System of Ohio, the Teacher Retirement System of Texas, PGGM and Sweden’s AP4. RI coverage

The Service Employees International Union (SEIU) and Sodexo USA, the American arm of the French food services and facilities management giant, the world’s 21st largest employer, have settled a dispute over labour rights and conditions that was heading to court. Both sides said they had withdrawn respective charges and lawsuits and the SEIU has ended a two-year public campaign called “Clean up Sodexo”.

Proxy advisory firm ISS, Institutional Shareholder Services, has released the results of its 2011-12 Policy Survey, which polls clients and companies. More than 335 total responses were received, including 138 from institutional investors. Executive compensation continues to be a top concern in North America for a second straight year.Canada’s Northwest & Ethical Investments and retirement system Bâtirente have begun a class action against controversial Toronto-listed forestry firm Sino-Forest. “In our longstanding history of engaging with companies … this is the first time NEI Investments has taken this last-resort approach to protect investors,” said Bob Walker, Vice President, Ethical Funds, NEI Investments. The suit alleges Sino-Forest “fundamentally misrepresented the integrity” of its operations and financial reporting.

ORSE, the French Study Center for Corporate Social Responsibility, has published the English version of its report on engagement practices with corporates implemented by shareholders and other stakeholders in France and abroad.
The Council of Institutional Investors, the non-profit association of pension and other funds with combined assets of over $3trn, has released a study Say on Pay: Identifying Investor Concerns, looking at why investors voted against “say on pay” at companies during the most recent annual meeting season in the US. The study was carried out by Farient Advisors.

The National Association of Corporate Directors, the US business group, is asking all boards to make diversity a top priority “because we know that business success depends on it,” says NACD Chair Barbara Hackman Franklin. The association and consulting firm PwC co-hosted more than 120 corporate leaders to discuss opportunities for women in the boardroom on September 15 in New York.

Shareholder say-on-pay lawsuits in the US have had a boost with a recent legal ruling. The case, a shareholder derivative suit, was brought by the NECAIBEW Pension Fund on behalf of telecoms firm Cincinnati Bell against its board. Judge Timothy Black in Cincinnati federal court ruled that the company wasn’t entitled to ‘business judgment’ protection due to shareholders’ “overwhelming rejection” of executive pay packages. Link

A credit crisis-related lawsuit brought by German bank Landesbank Baden-Wurttemberg against Goldman Sachs and TCW Asset Management has been dismissed. The case revolved around a mortgage-backed credit default obligation called Davis Square Funding VI. It was dismissed by Judge William Pauley of the US District Court for the Southern District of New York yesterday.