The Los Angeles City Employees’ Retirement System (LACERS), a $13.9 billion public pension fund, is requesting information from vendors with expertise in providing proxy voting services with a full range of proxy analysis and reporting capabilities. I expect they will hear from the dominant proxy voting services providers, ISS and Glass Lewis, but this also seems like a real opportunity for firms that are smaller, newer and/or based outside the United States to provide proxy voting services to a large public pension fund.
LACERS encourages smaller firms to apply for this RFI.
The Request for Information (RFI) is available for download on the LACERS website. Questions regarding the request parameters should be emailed to email@example.com, with the name of your firm along with the phrase ‘Proxy Voting Services’ appearing in the subject line, prior to 5:00 P.M., Pacific Daylight Time, on Monday, July 28, 2014. Finals information responses are due at 5:00 P.M. (PDT) on Friday, August 22, 2014.
LACERS currently utilizes a full service proxy voting agent to vote all proxies in accordance with LACERS’ adopted Proxy Voting Guidelines. Presently, LACERS holds approximately 1,796 domestic individual positions among 27 separately managed domestic equity accounts. LACERS also holds approximately 4,135 international individual positions among 12 separately managed international equity accounts.
The scope of proxy voting services required by LACERS includes, but is not limited to, the following:
- Proxy analysis
- Review of LACERS’ Proxy Voting Policy (Attachment 1 of this RFI)
- Proxy vote execution and reporting (including exceptions to LACERS’ policy) in accordance with LACERS’ Proxy Voting Policy
- Record keeping of proxy analysis and activities recorded
- Reports of proxies voted
- Access to proxy-focused research reports
Proxy Voting Services Respondent Requirements:
Respondents should have 5 or more years experience in providing proxy voting services to institutional investors with combined assets under management of greater than $1 billion. LACERS encourages smaller firms to apply for this RFI.
Sample of RFI Questions for Proxy Voting Services Respondent
- Describe your firm’s organizational structure including operational and administrative units?
- What measures do you take to ensure that a client’s specific guidelines are followed and all proxies are voted?
- List three client references (preferably public pension plans) with contact information and size of their total fund portfolio.
- Please provide your client list (with redactions, as required).
- How many proxy voting clients have you gained in the past 12 months?
- How many proxy voting clients have you lost in the past 12 months? Please state reasons for client’s loss.
- How does your firm address the challenges of voting proxy ballots in non-US markets, such as translation of proxy proposals in the local language, casting ballots by physically being present at shareholder meetings, and share blocking?
- Please attach a sample of your proxy voting report summary.
- Please describe any material litigation that your company has been involved in over the last three years. Also please describe of any current litigation.
- Please disclose the nature of any relationship you have or have had with any LACERS Board Member, consultant, general manager, or staff. If there are no conflicts of interest, please state, “There are no conflicts of interest to report.”
- Is there any reason why your firm will not be able to vote in accordance to our proxy voting policies (e.g. if any of our securities that vote proxies are illiquid names and they fall outside of your universe of coverage)? If so, please provide a detailed explanation of what exceptions could arise.
- Please explain in detail the billing structure that will be used and what services will be provided. Are there are any fee breakpoints? Can LACERS procure services on an a la carte basis or are all services and fees comingled based on the quantity of accounts serviced? Are there any additional fees that are charged for proxy research reports (e.g. company analysis)? Under what circumstances would your firm charge LACERS an amount above the quoted fee?
- Please explain the voting process (a flowchart diagram is acceptable). Is there a portal where LACERS can review the proxy voting list? Is a post meeting report available to review the final vote outcome?
- What would be your lowest single-rate fee for one-year inclusive of all ballots voted and research for LACERS?
- Why should we hire your firm and not your competitors?