Most shareholders continue to vote with management on key issues, but these pro-management votes aren’t as automatic as they have been in the past, suggests the Vancouver-based Shareholder Association for Research and Education (SHARE) in a new report.
Its annual proxy vote survey, which analyzes the voting records of 32 firms with combined Canadian equity holdings in excess of $58 billion, finds that while shareholders often still side with management, “a growing number of shareholders are giving more care and attention to how they vote, with several key votes in 2012 registering 20% or more of shareholders voting against management recommendations.”
For example, it says nearly 30% of shareholders voted in favour of a shareholder proposal at Enbridge Inc. asking the company to report on the risks associated with First Nations’ opposition to the Northern Gateway pipeline.
“The response on the Enbridge shareholder proposal illustrates that shareholders increasingly recognize the investment risks associated with social and environmental issues when they vote,” said Peter Chapman, executive director of SHARE. “However many institutional investors, including charitable foundations and trusts, are not yet providing guidance to managers and proxy voting service firms to ensure that voting is aligned with their interests.”
It also notes that almost 25% of votes were cast against an executive compensation package for former SNC-Lavalin CEO, Pierre Duhaime, which included $1.9 million in salary continuance plus other benefits.
“In the realm of proxy voting, a vote of 25% against a severance package is a strong show of shareholder opposition,” notes Laura O’Neill, SHARE’s director of law and policy, “But one still wonders how more than 75% of shareholders voted in favour of the former CEO being rewarded so generously despite the significant loss in shareholder value on his watch.”
For the first time this year, SHARE is enabling investors to review select proxy voting decisions of participating fund managers and proxy service firms online and find out exactly how they voted on key issues. “It is important to have a resource that makes proxy voting practises easily accessible to pension fund trustees and other fiduciaries,” said Charley Beresford, executive director of the Columbia Institute, one of the report’s sponsors. “The proxy survey website allows shareholders to review how their proxy firm voted on environmental, social or governance issues with the click of a mouse.”