The Shareholder Association for Research and Education (SHARE) today released the findings of its 2006 Key Proxy Vote Survey of Canadian Investment Managers.

Among its findings, the survey shows a majority of private-sector, pension fund trustees are giving complete discretion for proxy votes to investment firms that manage their funds.

The survey polled investment managers and proxy-voting services that have Canadian pension funds as clients. The 34 firms responding to the survey collectively manage $371.6 billion in pension assets, of which $88.5 billion are invested in Canadian equities.

Regulators have identified proxy voting as one of the key responsibilities of pension fund trustees. Nonetheless, 73% of the firms participating in the 2006 survey indicated that they had been given complete discretion to vote the proxies for more than 85% of the pension fund assets they manage.

“A proxy enables a shareholder to vote shares in a company. The effect of proxy votes on the value and management of a company is the reason proxy votes are considered to be assets of a pension plan,” says Laura O’Neill, Director of Law and Policy, SHARE. “Pension plan trustees have a duty to oversee how their plans’ proxies are voted as part of their overall responsibility to oversee the assets of the plan.”

“For trustees, the failure to manage or guide outside investment firms on how to vote proxies is a very serious matter. To not do so, leaves them open to potential liability and possible charges of negligence. There is a very real danger that they could be found in violation of the Standard of Care provision found in federal and provincial pensions benefits legislation.”

Mutual funds in Canada and the United States are now required to disclose their proxy-voting records and not surprisingly, the SHARE Survey found that more investment managers are disclosing their proxy votes to the public. This year’s survey reveals that in 2006, 29% of the firms participating in the survey said they disclosed the results of proxy votes to the public, up from only 11%, in 2005.

The survey asks investment firms the process by which, and how they voted on 30 management and shareholders’ ballots during the 2006 proxy season. These initiatives ranged from Executive Compensation and Golden Parachutes to Human Rights. Of particular note, 94% of participating firms voted for a proposal to allow shareholders to vote on directors individually instead of on a slate. And a proposal at Ivanhoe Mines that would have allowed directors to award themselves stock options at their own discretion was opposed by 67%.

SHARE is a national non-profit organization dedicated to providing leadership on responsible investment policy and practice, both in Canada and globally.