UK South Yorkshire fund targets non-execs and auditors

€4bn fund revises voting guidelines.

The £3.5bn (€4bn) South Yorkshire Pension Authority has revised its voting guidelines to focus its engagement attention on non-executive directors, remuneration and auditors, according to fund documents.
Its new voting guidelines call for votes to be cast against companies where non-executive directors “comprise less than one half of the board”. The changes were approved at a meeting of the fund’s investment board last month and are now available on its website.
And votes should also be cast “against” where there is no Combined Code compliance, where auditors have resigned and no explanation is given and where the remuneration report has not been put to shareholders. Votes will be abstained where there is “inadequate environmental disclosure”.
As for bonus schemes, the fund says that employeeincentive plans “will be scrutinised carefully to ensure that the targets set are sufficiently ambitious and challenging (without being unachievable) and that the awards are in an acceptable form”.
The authority uses proxy voting specialist Manifest, which was hired in December 2008.
“The Authority is now focussing on the independence of non-executive directors, remuneration policies and the independence and accountability of auditors,” the SYPA says.
It will vote against the re-appointment of auditors where non-audit fees are considerably in excess of audit fees in the year under review. It also reckons that the length of tenure of audit firms “warrants scrutiny and that the periodic change of advisors should be encouraged”. The SYPA says the financial crisis has led “many to question the objectivity of the audit process”.