Proxy voting disclosure of non-U.S. funds: From accessible to invisible; clear to cumbersome
By Rosanna Landis Weaver and Dan McCarthy As we begin work on our third “100 Most Overpaid CEOs” report with its analysis of how funds vote on egregious pay packages, we are also expanding the range of our research to look at non-U.S. funds.
The degree of transparency on proxy voting practices and data accessibility covers a range as vast as the globe. Many funds – including a preponderance of Canadian funds - publish their voting records in searchable databases. Others disclose this information in a more cumbersome way, but it is accessible (though one may need to use Google translate.)
Others publish only voting guidelines, or aggregated voting data. Dutch fund ABP discloses the why and how of their voting without getting to company-level specifics. For example, ABP discloses their aggregate voting data for executive compensation, noting that out of 1700 remuneration resolutions, they voted “against’ 54% of the time, and “for” 45% of the time. Further along they shed light on their rationale, “The main reasons for voting against were excessively generous severance packages, inadequate links between payment and performance and opaque schemes.”
In our review of websites we found it not uncommon for funds to focus only on voting domestic equities. Foreign equities may then be delegated to a third party, including proxy advisors or money managers. A few international funds take it a step further, declining to even vote on foreign equities at all. Given the disproportionately high pay of CEOs in the U.S. market, we believe that this is an abdication of their responsibility.
Finally, there were a number of funds that did not respond to our attempts at outreach. If you have suggestions for other funds to include please email me at [email protected]. I will update this post with new links as they become available.
The superannuation funds of Australia are the rough equivalent of pension funds in the United States, but with stronger government support. We reached out to several of the largest of these funds. Two that disclose proxy votes are:
QSuper, based in Brisbane, Queensland delegates proxy voting to its “externally mandated managers the right to vote in accordance with our managers’ respective proxy voting policies.” While QSuper noted it did not disclose votes on its website at this time, the representative added in correspondence, “There are numerous changes to reporting standards for the superannuation industry that are currently being implemented and tabled for industry discussion.”
In Canadian funds (a few of which were included in the report last year) we found the best disclosure record. Though the disclosure is voluntary, it is widespread among large public sector funds, in part due to their attention to good governance and persistent efforts for transparency by responsible investor groups including SHARE (Shareholder Association for Research and Education).
“Given the importance of proxy voting to the sustainability and stability of capital markets, an argument can be made for a wider commitment to proxy voting transparency among pension plans and their asset managers,” Peter Chapman, Executive Director wrote in response to our enquiries. “The seven crown asset managers and pension funds disclose [included below] voluntarily, covering more than a dozen of Canada’s largest pension plans. All are in the public sector. “
- The British Columbia Investment Management Corporation (bcIMC) bcIMC -
- Alberta Investment Management Corporation (AIMCo)
- Canadian Pension Plan Investment Board (CPPIB)
- Ontario Teachers’ Pension Plan (OTTP)
- Ontario Municipal Employees Retirement (OMERS)
- Quebec’s Caisse de depot et placement
Norges Bank, the central bank of Norway, manages the Government Pension Fund of Norway, potentially the world’s largest sovereign wealth fund. In spring 2016, Yngve Slyngstad, CEO of the fund said, "We think, due to the way the issue of executive remuneration has developed, that we will have to look at what an appropriate level of executive remuneration is as well [as the link between pay and performance]."
Bundes Pensionkasse Swiss Federal Pension Fund PUBLICA actively exercises its voting rights in respect of companies incorporated in Switzerland, and discloses “voting behavior” on its site. The Fund reports that, “Voting rights in respect of companies ex Switzerland are typically not exercised.” However, in cases where a company is incorporated in Switzerland but listed on the NYSE the fund votes on advisory votes on pay. At TE Connectivity this year, for example, the fund voted against the pay package.
In the United States money managers are required to file forms with the SEC reflecting their proxy vote (NP-X filings which we used in our report.) There is no similar requirement in the UK, but it is considered a best practice for funds to provide disclosure on their websites. This is a list of funds that have signed onto the UK Stewardship Code. Principle 6 of the codes states that Institutional investors should have a clear policy on voting and disclosure of voting activity.
The clear policy, however, does not equal clear disclosure. In some cases we found language such as this from the Co-Operative Pension Scheme: “The Trustee does not generally seek to prescribe how its investment managers should vote proxies on the equity they hold on behalf of the Scheme.”
Other funds – including the Greater Manchester Pension Fund, West Midlands Pension Fund, Merseyside Pension Fund, Lancashire County Pension Fund – subscribe to research and/or voting services from Pensions and Investments Research Consultant (PIRC). One of the largest non-U.S. proxy advisory firms that cover U.S. companies, PIRC has a record of assiduously advising shareholders to vote against excessive compensation packages. However, in a number of cases there is language that allows for a case by case override of PIRC’s recommendations, and there is no way to ascertain if or when such discretion is used.
In some cases the voting is disclosed, but dated and/or cumbersome to sort out. For example, British Airways Pension votes are provided through 2014, but are reported by only by proxy item number.
The public pension funds on the list for which we were able to find voting detail include:
British Coal Staff Superannuation Scheme (though it provides separate links with various disclosure for: Hermes, Blackrock, Schroders and Bailee Gifford.