The Ontario Teachers’ Pension Plan is calling on securities regulators to carry out an independent review of the proxy voting system.
In a comment letter to the Ontario Securities Commission (OSC) in response to its draft statement of priorities, the pension giant calls on the regulator to do more to facilitate shareholder empowerment, and improve the proxy voting system.
The letter stresses that improvements to the proxy voting system, “are long overdue and are critical to the credibility of shareholders’ votes”. In particular, it says that the OSC (or the Canadian Securities Administrators (CSA)) should conduct an independent, empirical review of the system.
“We emphasize that this review must be an independent review,” it says. “By that we mean that the party conducting the review must be independent of the third party service providers who operate the proxy voting system. We are concerned that securities regulatory authorities have been too dependent on these third party service providers for information about the operation of the proxy voting system and the problems that may exist.”
Teachers says that these firms are heavily invested in the current model, and it stresses that the regulators, “must understand the issues that may exist without regard to the agendas of those whose business is dependent on the system.”
“An independent review will require a significant expenditure of funds, but without such a review we do not believe that the OSC will be in a position to evaluate the integrity of the system,” it adds.
Teachers’ says that such a review will also allow regulators to address two other issues that it believes should be short term priorities: ensuring that shareholder lists are fully reconciled so that only one person can provide voting instructions for each share; and, ensuring that they receive confirmation from the issuer that their voting instructions have been received and recorded.
Additionally, in its comment, Teachers’ says that it believes that voting for directors on an individual basis, and majority voting, should be fundamental shareholder rights. It also calls for improved disclosure of election results.
“Given the growing importance of the shareholder vote, it follows that the disclosure of that vote should be made promptly after a shareholder meeting and be provided at a level of detail to include the total votes cast for, against, withheld or abstained (as the case may be) on each resolution voted on at the meeting. Any other form of vote reporting, such as simply stating a proposal ‘passed’ or ‘failed’ or disclosing only percentages and not total votes cast, is of little utility to shareholders and therefore should not be permitted,” it says.