The Shareholder Association of Research & Education says that investment managers are not doing enough to challenge corporations on governance issues such as board independence and excessive executive compensation.

SHARE polled Canada’s top investment managers and proxy voting services on how they voted on 27 management and shareholder proposals filed during the 2002 proxy season. The proposals deal with issues that have long-term impact on share value, such as board and management independence, corporate disclosure, executive compensation, labour rights, and shareholder rights.

Results indicate that investment managers vary widely in how they vote proxies. Many managers still voted for what SHARE calls “excessive” increases in executive compensation, to appoint a board member with a record of excessive absenteeism, and voted against a proposal for independent boards of directors of controlled companies.

“Given the recent crisis in confidence in North American corporations, I’m surprised at the results,” said SHARE’s director of Law and Policy, Gil Yaron, in a news release. “SHARE would like to see investors and managers vote their proxies in a way that promotes stronger corporate governance and performance. Investors have an important role to play in holding corporations accountable, curbing corporate excess, and protecting shareholder value.”

SHARE says that forty firms responded to the survey; more than double the response rate from last year’s survey. “I’m pleased that more investment managers are participating in the survey,” said Canadian Labour Congress President and SHARE board member Ken Georgetti. “Investment managers should be willing to stand by their voting record and be accountable for the choices they make when they elect corporate boards, approve stock option plans or appoint auditors. “

Of the 98 firms surveyed, 12 refused to participate and 46 did not respond. This year’s top-ranked firms are: Fairvest Corp., Greystone Managed Investments Inc, Marco Consulting Group, and Jarislowsky, Fraser Ltd.

The firms that refused to participate are: Barclays Global Investors Canada Ltd., Bona Vista Asset Management Ltd., Brandes Investment Partners, Capital Guardian Trust Co., GE Asset Management Inc., Genus Capital Management Inc, Gluskin Sheff + Associates Inc., London Life Investment Management Ltd., McLean Budden Limited, Pembroke Management Ltd., Scheer, Rowlett & Associates Investment and TD Asset Management Inc.