While the majority of shareholders continue to vote with management, a growing number of shareowners are giving more care and attention to how they vote, with several key votes in 2012 registering 20% or more of shareowners voting against management recommendations.
One highlighted issue is a shareholder proposal at Enbridge Inc. asking the company to report on the risks associated with First Nations’ opposition to the Northern Gateway pipeline. Nearly 30% of shareowners voted for the proposal, noting that First Nations’ consent plays a pivotal role in the future of the Enbridge proposal. According to Peter Chapman, Executive Director of the Shareholder Association for Research and Education (SHARE):
The response on the Enbridge shareholder proposal illustrates that shareholders increasingly recognize the investment risks associated with social and environmental issues when they vote. 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.
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. SHARE has been producing the survey since 2001 with the goal of making proxy voting more accessible and encouraging fiduciaries to more rigorously review the work of those that vote proxies on their behalf.
The vote result at SNC-Lavalin also illustrates the increasing willingness of shareholders to vote against management. At SNC-Lavalin’s shareholder meeting in May 2012, nearly one-quarter of votes were lodged against the executive compensation package offered to former CEO Pierre Duhaime, which included $1.9 million in salary continuance plus other benefits. This generous severance package was offered despite the on-going criminal investigation into corruption and bribery charges both in Canada and Libya during Mr. Duhaime’s tenure. As noted by Laura O’Neill, SHARE’s Director of Law and Policy:
In the realm of proxy voting, a vote of 25% against a severance package is a strong show of shareholder opposition. 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.
New this year, individuals and institutions can review select proxy voting decisions of participating fund managers and proxy service firms online and find out exactly how they voted on key issues. Charley Beresford, Executive Director of the Columbia Institute, one of the report’s sponsors, explained:
It is important to have a resource that makes proxy voting practices easily accessible to pension fund trustees and other fiduciaries. 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.
The Canadian Key Proxy Vote Survey is a project of the Columbia Institute, Fonds de solidarité (FTQ) and the Shareholder Association for Research and Education (SHARE).
About the Columbia Institute: The Columbia Institute is a national charitable organization whose goal is to foster inclusive, sustainable communities.
About the Fonds de solidarité: The Fonds de solidarité (FTQ) is a development capital fund that calls upon the solidarity and savings of Quebecers to help fulfil its mission to create and save jobs in Québec by investing in small and medium‐sized businesses in all spheres of activity. The Fonds also seeks to encourage Quebecers to save for retirement and to offer its over half a million owner‐shareholders a reasonable return over and above the outstanding tax benefits they receive by purchasing Fonds shares.
About SHARE: The Shareholder Association for Research and Education (SHARE) is a leading advisor to institutional investors on the integration of environmental, social and governance considerations in investment decision-making.
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