Thursday, February 21, 2013

Proxy voting survey reveals growing support for shareholder proposals

A growing number of shareholders are paying more attention to how they vote on key issues, according to SHARE's annual proxy voting survey. Several votes in 2012 registered 20% or more of shareholders voting against management recommendations.

Firms that participated in the survey were more likely to vote against the recommendations of management, the survey revealed. Participants were also more likely than other shareholders to vote for shareholders’ proposals, and more likely to support proposals that asked companies to be more socially and environmentally responsible.

“For instance, 61% of the participating firms voted for a proposal filed with Alimentation Couche-Tard asking that company to prepare a sustainable development report with a view to eventually comply with the Global Reporting Initiative guidelines,” the survey found. “And 48% of participating firms voted for a proposal asking Enbridge to report on the risks of failing to get First Nations’ support for its Northern Gateway project.”

Nearly 30% of shareholders voted in favour of the Enbridge proposal, illustrating that shareholders increasingly recognize the investment risks associated with social and environmental issues when they vote, said Peter Chapman, SHARE’s Executive Director. “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.”

SHARE also highlighted vote results at SNC Lavalin, where nearly one-quarter of votes were lodged against the executive compensation package offered to former CEO Pierre Duhaime.

“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.”

The 2012 annual Key Proxy Vote Survey analyzed the voting records of 32 firms with combined Canadian equity holdings in excess of $58 billion in 2012. 

Full results are available at the survey website.

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