Proxy voting is a key component of shareholder advocacy and an important responsible investing strategy. Every year, the Shareholder Association for Research and Education (SHARE) surveys the proxy voting practices of the country’s investment managers. The results of the ninth annual survey are generally positive and slightly better than last year, SHARE says, with one notable exception.
The study indicates that 71% of investment managers vote most of their pension fund clients’ proxies at their own discretion, without instructions or guidance. That’s up from 63% last year and reverses a downward trend in place since 2004.
“This suggests that more institutional investors, including pension funds, let their money manager decide how their proxies should be voted,” says Laura O’Neill, SHARE’s director of law and policy. “The lack of direction is cause for concern.”
“Pension funds, and other institutional investors, should give their proxy voting agents guidance on how their proxies should be voted, ideally by adopting a set of proxy-voting guidelines,” O’Neill adds. “This is important because pension fund trustees have a fiduciary duty to oversee how the proxies attached to their funds’ stocks are voted.”
On the positive side, the survey found that 40% of firms disclose their proxy voting guidelines to the public (an increase of 11% over 2008) and 49% consult with their clients about proxy voting guidelines (up from 39% in 2008). In addition, votes cast by participating firms were more likely to match SHARE’s votes than in 2008.
Thirty-five firms responded to the survey, a response rate of 56%, also an increase from previous years. SHARE says that indicates “greater fund manager willingness to be transparent and accountable about the exercise of proxy voting rights on behalf of clients.”
Download the full survey.
Showing posts with label proxy voting. Show all posts
Showing posts with label proxy voting. Show all posts
Tuesday, February 23, 2010
Wednesday, March 18, 2009
TD Bank gets on “say on pay” bandwagon
TD Bank agreed Wednesday to allow its shareholders an advisory vote on executive compensation, starting next year.
The votes, which are non-binding, have already been accepted by the rest of Canada’s big banks, including RBC, CIBC, Scotiabank and BMO.
The resolution, brought forward by Meritas Mutual Funds and Mouvement d'éducation et de défense des actionnaires (MEDAC) was to be voted on at TD’s annual meeting on April 2, however in a pre-emptive move, the bank decided to accept the proposal and the resolution will now be withdrawn.
"TD promotes open and proactive dialogue with shareholders, ensuring their feedback on compensation and other important issues is heard and carefully considered by the board," TD chairman John Thompson said in a release Wednesday.
"It's now clear from the votes held this year at the other major Canadian banks' meetings that the opinion of the investment community, while still divided, has moved in favour of an advisory vote, and so we've acted accordingly."
Last week, TMX Group, parent of the Toronto Stock Exchange, and Sun Life Financial both said they will voluntarily offer shareholders a non-binding advisory vote on executive pay starting at their annual meeting next year. As a result, Meritas withdrew its proposal at both companies.
Just a few weeks ago, Canadian banks were carefully counting proxy votes before making the decision to adopt a non-binding pay vote, the Shareholder Association for Research and Education (SHARE, which assisted Meritas on the resolutions) noted on its website. “Now, companies are implementing a shareholder 'say on pay' well ahead of their shareholder meetings.”
Laura O’Neill, director of law and policy at SHARE, says she’s pleased with TD’s decision, but adds that “given the lockstep in which our big banks move on governance, we certainly didn’t think that TD had much choice. But we’re happy to see the announcement a full two weeks before their AGM.”
O’Neill notes that Sun Life and TMX’s acceptances of the resolution are perhaps even more significant, providing a toehold into the world of issuers who are not banks, “because that’s clearly where we want to go.”
There are still a couple of outstanding executive compensation resolutions: Potash Corporation meets May 7 and a proposal was also filed at Nortel Networks, which filed for protection from creditors in January. “I doubt very much we’ll ever see this proposal on a Nortel ballot,” O’Neill concedes.
Considering the momentum the executive compensation has generated during this proxy voting season, O’Neill says she’s very interested to see what will happen next. “We’d like to see movement by the Canadian Securities Administrators to put this in place across the board. It would be a quick, clean way to get this done.”
The votes, which are non-binding, have already been accepted by the rest of Canada’s big banks, including RBC, CIBC, Scotiabank and BMO.
The resolution, brought forward by Meritas Mutual Funds and Mouvement d'éducation et de défense des actionnaires (MEDAC) was to be voted on at TD’s annual meeting on April 2, however in a pre-emptive move, the bank decided to accept the proposal and the resolution will now be withdrawn.
"TD promotes open and proactive dialogue with shareholders, ensuring their feedback on compensation and other important issues is heard and carefully considered by the board," TD chairman John Thompson said in a release Wednesday.
"It's now clear from the votes held this year at the other major Canadian banks' meetings that the opinion of the investment community, while still divided, has moved in favour of an advisory vote, and so we've acted accordingly."
Last week, TMX Group, parent of the Toronto Stock Exchange, and Sun Life Financial both said they will voluntarily offer shareholders a non-binding advisory vote on executive pay starting at their annual meeting next year. As a result, Meritas withdrew its proposal at both companies.
Just a few weeks ago, Canadian banks were carefully counting proxy votes before making the decision to adopt a non-binding pay vote, the Shareholder Association for Research and Education (SHARE, which assisted Meritas on the resolutions) noted on its website. “Now, companies are implementing a shareholder 'say on pay' well ahead of their shareholder meetings.”
Laura O’Neill, director of law and policy at SHARE, says she’s pleased with TD’s decision, but adds that “given the lockstep in which our big banks move on governance, we certainly didn’t think that TD had much choice. But we’re happy to see the announcement a full two weeks before their AGM.”
O’Neill notes that Sun Life and TMX’s acceptances of the resolution are perhaps even more significant, providing a toehold into the world of issuers who are not banks, “because that’s clearly where we want to go.”
There are still a couple of outstanding executive compensation resolutions: Potash Corporation meets May 7 and a proposal was also filed at Nortel Networks, which filed for protection from creditors in January. “I doubt very much we’ll ever see this proposal on a Nortel ballot,” O’Neill concedes.
Considering the momentum the executive compensation has generated during this proxy voting season, O’Neill says she’s very interested to see what will happen next. “We’d like to see movement by the Canadian Securities Administrators to put this in place across the board. It would be a quick, clean way to get this done.”
Tuesday, February 3, 2009
Vancity and Inhance top annual SRI fund survey
Vancity Circadian Monthly Income Fund and Inhance Monthly Income Fund Class A were the top two SRI mutual funds in Canada last year, according to Corporate Knights magazine’s seventh annual survey of the country’s SRI universe.
Ethical Balanced Fund placed third, followed by the Ethical Advantage 2010 Fund and the Ethical Advantage 2030 Fund. Meritas Monthly Dividend and Income Fund ranked sixth, while RBC Jantzi Balanced Fund Series A, Meritas Balanced Portfolio Fund, Ethical Advantage 2015 Fund and Ethical Advantage 2040 Fund rounded out the top ten.
Corporate Knights crunched the numbers on 64 Canadian SRI funds, using a combination of social and performance scores as well as one-to-five “shield” scores, based on the following: Performance: 40%; Integration: 17%; Engagement: 15%; Portfolio Turnover Rate: 10%; and Systemic: 8%.
Six Ethical Funds were given five shields, while Vancity and Inhance picked up one each. The relatively high performance weighting in Corporate Knight’s methodology partially explains why Ethical didn’t dominate the top ten.
The Ethical Special Equity Fund, which finished 20th in the overall rankings, had a dismal one-year return of -33.8%. By comparison, Vancity’s Circadian Monthly Income Fund lost 16.4% while the Inhance Monthly Income Fund Class A was off 16.5%.
Still, six of the top 10 SRI equity funds were from the Ethical family, thanks to their higher ranking scores in the social categories. Vancity and Inhance were the top two balanced funds, but also generated the highest scores overall as a result of their stronger performance numbers.
Corporate Knights added two new assessments to its survey this year: portfolio turnover rates and proxy voting records.
The average turnover rate of all funds surveyed was 28%. Ethical led the pack in this category: its Canadian Index Fund had a turnover rate of 0% while Ethical Advantage 2040 and Ethical Advantage 2015’s turnover rates were 1.0% and 1.5%, respectively.
Acuity Social Values Canadian Equity had the highest turnover rate at 128%, followed by Acuity Social Values Balanced Fund Class A at 104%.
“High turnover indicates that the fund manager may be missing the long-term value forest for the short-term trees,” says Corporate Knights’ Managing Editor Melissa Shin. “A whole slew of recent studies have shown that the majority of CEOs will sacrifice maximizing long-term economic value in order to avoid missing Wall Street’s quarterly expectations.”
On proxy voting, Ethical Funds, Inhance Investment Management and Investors Group each had a 100% record, “meaning that each time they had the opportunity to vote on an ESG-related shareholder resolution (that garnered at least 10% of shareholder support), they voted in favour of the resolution,” Corporate Knights says. Meritas Mutual Funds, which itself proposed several resolutions, had an ESG voting record of 90%. The survey notes that Ethical, Inhance and Meritas all publish their proxy voting guidelines.
Ethical Balanced Fund placed third, followed by the Ethical Advantage 2010 Fund and the Ethical Advantage 2030 Fund. Meritas Monthly Dividend and Income Fund ranked sixth, while RBC Jantzi Balanced Fund Series A, Meritas Balanced Portfolio Fund, Ethical Advantage 2015 Fund and Ethical Advantage 2040 Fund rounded out the top ten.
Corporate Knights crunched the numbers on 64 Canadian SRI funds, using a combination of social and performance scores as well as one-to-five “shield” scores, based on the following: Performance: 40%; Integration: 17%; Engagement: 15%; Portfolio Turnover Rate: 10%; and Systemic: 8%.
Six Ethical Funds were given five shields, while Vancity and Inhance picked up one each. The relatively high performance weighting in Corporate Knight’s methodology partially explains why Ethical didn’t dominate the top ten.
The Ethical Special Equity Fund, which finished 20th in the overall rankings, had a dismal one-year return of -33.8%. By comparison, Vancity’s Circadian Monthly Income Fund lost 16.4% while the Inhance Monthly Income Fund Class A was off 16.5%.
Still, six of the top 10 SRI equity funds were from the Ethical family, thanks to their higher ranking scores in the social categories. Vancity and Inhance were the top two balanced funds, but also generated the highest scores overall as a result of their stronger performance numbers.
Corporate Knights added two new assessments to its survey this year: portfolio turnover rates and proxy voting records.
The average turnover rate of all funds surveyed was 28%. Ethical led the pack in this category: its Canadian Index Fund had a turnover rate of 0% while Ethical Advantage 2040 and Ethical Advantage 2015’s turnover rates were 1.0% and 1.5%, respectively.
Acuity Social Values Canadian Equity had the highest turnover rate at 128%, followed by Acuity Social Values Balanced Fund Class A at 104%.
“High turnover indicates that the fund manager may be missing the long-term value forest for the short-term trees,” says Corporate Knights’ Managing Editor Melissa Shin. “A whole slew of recent studies have shown that the majority of CEOs will sacrifice maximizing long-term economic value in order to avoid missing Wall Street’s quarterly expectations.”
On proxy voting, Ethical Funds, Inhance Investment Management and Investors Group each had a 100% record, “meaning that each time they had the opportunity to vote on an ESG-related shareholder resolution (that garnered at least 10% of shareholder support), they voted in favour of the resolution,” Corporate Knights says. Meritas Mutual Funds, which itself proposed several resolutions, had an ESG voting record of 90%. The survey notes that Ethical, Inhance and Meritas all publish their proxy voting guidelines.
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