RI Governance & Engagement, September 1: CalPERS rallies support for director election proposal

RI’s regular round-up of governance and engagement news

California pension giant CalPERS, the $228bn (€158bn) California Public Employees’ Retirement System, has written to fellow Smithfield Foods shareholders asking for their support for its non-binding proposal for annual director elections at the Virginia-based meat producer’s annual shareholder meeting on September 21. CalPERS, which owns around 476,000 shares in the firm, says it “believes the ability to elect directors annually is an important shareowner right to ensure director accountability”.

Oil major Shell says it has no intention of unilaterally halting its activities in Syria, according to a report from Radio Netherlands Worldwide. It quoted Shell Nederland Director Dick Benschop as making the remarks in response to appeals from Dutch MPs. Institutional investors from the $3trn Conflict Risk Network (CRN) had earlier called on oil firms – including Shell and Total – to cease their operations the strife-torn country.
The Norwegian Ministry of Finance has excluded Mexican billionaire Carlos Slim’s Grupo Carso from the investment universe of the NOK2.9trn (€370bn) Government Pension Fund over its involvement in tobacco production. The fund’s Ethics Council found Grupo Carso owns 70% of tobacco producer Compañia Mercantil de Productos de Tabaco S.A de CV and 20% of Philip Morris S.A de CV. Announcement

Custody banking giant BNY Mellon, facing pension fund suits over foreign exchange pricing from Virginia and Florida, has ousted its chairman and chief executive Robert Kelly. He will be replaced by company president Gerald Hassell. The Financial Times cited insiders saying there were “differences in approach to managing the company” and reported the lawsuits and legal risks relating to its role as a mortgage security trustee may have worried investors.

CalPERS has reached a settlement with credit ratings agency Fitch, according to Reuters. Fitch was one of three firms that the largest US pension fund had claimed misrepresented the health of structured products – leading to around $1bn of losses for the fund. CalPERS had sued Fitch and rivals Moody’s and Standard & Poor’s in 2009. Fitch will be dismissed from the case and won’t make any payment to CalPERS.The Pension Protection Fund, the UK’s pensions lifeboat scheme, has tendered for an integrated voting and engagement advisor. It said it “requires immediate access to the financial services marketplace to ensure that its Voting and Engagement decisions are made in the best interests of the beneficiary members under its management”. The incumbent is F&C and all candidates for the three-year contract will be required to be signatories to the Principles for Responsible Investment. The deadline for receipt of tenders is September 16. Tender
Two Canadian pension funds – the Labourers’ Pension Fund of Central and Eastern Canada and the International Union of Operating Engineers – have begun their C$7.3bn (€5.2bn) class action lawsuit against controversial Toronto-listed China forestry firm Sino-Forest and its auditor Ernst & Young. Lawyers have made a statement of claim against the company saying there were “misrepresentations” in its public disclosures and “unjust enrichment, oppression and conspiracy”.
Investors including the Lothian Pension Fund, the Alameda County Employees’ Retirement Association and the Government of Guam Retirement Fund have reached a $90m (€62.5m) settlement with former Lehman Brothers CEO Dick Fuld and other executives, according to the Financial Times. The investors had filed suit claiming Fuld and Lehman’s board misled shareholders about its financial state before it filed for bankruptcy.

The state of Nevada has widened its existing lawsuit against Bank of America relating to the mortgage operations of its Countrywide subsidiary. The amended complaint from Nevada’s Attorney General Catherine Cortez Masto alleges the bank’s misconduct “cuts across virtually every aspect of its operations”. BofA’s “deceptive practices have resulted in an explosion of delinquencies and unauthorized and unnecessary foreclosures in the State of Nevada” Masto says. Link to site

In August 2011, the ‘Whistleblower Improvement Act of 2011’ was introduced in the House of Representative’s Committee on Financial Services and Agriculture by Representative Michael Grimm (R-N.Y). The aim of the bill is to ‘improve’ the latest whistleblower rules officially introduced by the Securities and Exchange Commission (SEC) as part of the Dodd-Frank Act on 12 August 2011 by ensuring that internal reporting procedures existing in companies are adhered to and that whistleblowers cannot report straight to the SEC.