Annual Meeting Reports

I don’t get out to attend many annual meetings but I would like to encourage anyone who does to report on what happened. Matthew Rafat, who writes for Seeking Alpha, is the only one I know of who routinely writes up his impressions of these events.

On April 14, Rafat wrote Notes From the 2010 Brocade Shareholder Meeting. I see management had two governance proposals on the proxy. One to declassify the board. The other to end supermajority requirements. Since these both came from management, I suspect they got the votes required for adoption. However, I would be interested to know if there was any discussion at the meeting of these proposals and their importance. Rafat’s discussion of Brocade’s strategy is good. I wish he would discuss governance concerns more frequently but at least he is out there giving us some idea of what happens.

John Chevedden reports that a shareowner proposal by Patricia Shaw of Scarborough, Maine, submitted by Ram Trust Services of Portland Maine won 55% support at Weyerhaeuser this morning in spite of management opposition. The proposal was item 6 and advocated for a right for 10% of shareholders to call a special meeting. I see that, as reported by ProxyDemocracy.org, Green Century, CalSTRS, CBIS, Florida SBA, and AFSCME all voted in support. In addition, Chevedden tells me that probably as a result of a shareowner proposal last year to end supermajority requirements that won 85% support and a 2005 proposal from CalPERS that won 73% to declassify the board, management put forward a proposal this year to not only  end supermajority requirements but also to declassify the board, allowing annual election of all directors. That important measure passed as well.

According to an e-mail alert from The Economist, “Nearly 40% of shareholders at UBS opposed a plan on executive pay in a consultative vote. The Swiss bank earlier forecast a pre-tax profit for the first quarter, but investors are furious at the huge losses it has previously incurred. Kaspar Villiger, the chairman, said he understood the anger, but that UBS had ‘cut back too much last year, causing us to lose entire teams, their clients and the corresponding revenue.'” (4/15/2010)

Fair Pensions reports, their resolution on BP’s controversial plans in the Canadian tar sands (also known as oil sands) won support or abstention from 15% of shareowners, despite a strong company recommendation to oppose. Many, even some of those voting with management, agreed that BP had not provided sufficient assurance that tar sands plans are financially robust, and that the greater level of transparency called for in the resolution is still required.

Those attending the meeting raised questioned the companies’ use of demand projections that assume no change in governments’ climate change policies & imply catastrophic climate change. They also questioned, how adequate control of outsourced projects can be asserted and expressed concern over health impacts on local communities and the overall impact on BP’s finances. Catherine Howarth, CEO of FairPensions said:

Shareholder resolutions are primarily a means to draw attention to an issue of concern to investors. The vote today is only one outcome of a wider process, which has catapulted tar sands risks to the top of BP’s agenda, and has become a major topic of debate in the City. The task for investors now is to make the most of the disclosures made to date, and continue to robustly engage with BP into the future. This will be matched by an unprecedented level of scrutiny from campaigners, politicians and members of the public.

The resolution was filed by over 140 individual and institutional investors from around the world including The Co-operative Asset Management, Boston Common Asset Management, the Ecumenical Council for Corporate Responsibility (ECCR), the UNISON Staff Pension Scheme, Rathbone Greenbank, and other fund managers, foundations and faith groups. The resolution asks the company to commission and review reports setting out the assumptions made by both companies in deciding to proceed with tar sands projects regarding future carbon prices, oil price volatility, demand for oil, anticipated regulation of greenhouse gas emissions and legal and reputational risks arising from local environmental damage and impairment of traditional livelihoods. The resolution asks that the findings of the report and review should be reported to investors in 2011.

Votes cast at the AGM have yet to be counted, but figures for votes cast in advance and announced on the day indicate that 15% of shareholders either voted for the resolution (5.6%) or abstained (9.2%). Total advance votes are as follows:

For: 622,272,418
Against: 9.497,638,714
Withheld / abstained: 1,020,301,075
Total Shares: 11,140,212,207

On a somewhat related note, a new proxy voting guide from The Corporate Library has just been released by The Corporate Library and is available for free download. Proxy Voting on Labor Standards: A Case-by-Case Guide.

The second principle of the UN PRI commits signatories to active ownership with regard to environmental, social and governance (ESG) issues. “Proxy voting is an important means of exercising active ownership but can also be challenging to execute,” said Director of Research and Risk Analytics Kimberly Gladman, author of the voting guide. “Investors must not only understand the topic of the resolution, but also determine whether it deserves support at a particular company.” Although this guide focuses on labor standards, guidance on all ESG issues is similar.

Investors who conclude that a resolution is germane to the company’s business and that the company’s board and management are not yet adequately addressing the business risks and opportunities it poses are likely to support the resolution. Those who conclude that the issue is not significant for the company, or that it is significant but the company is already taking adequate steps to address it, may oppose the resolution. Some investors in the later group, however, may also choose to abstain on the resolution, in order to signal support for investor abstention to the issue in general, even if it does not seem pressing at this particular company at this time. Some investors also oppose or abstain on resolutions they believe are overly prescriptive or poorly constructed, even if they agree that the issue is important.

Abstentions, in the case of BP, may indicate the many investors want BP to do more, but aren’t necessarily ready to back this specific proposal. How many investors have the time to sit down and properly read and analyze the proposal? That where, in future, “branded” voting advice becomes ever critical. Who do you trust? Mark Latham’s Proxy Voting Brand Competition remains a critical read.