Most Significant Votes (w/e 10th May 2024)

Paul Lee

Head of Stewardship & Sustainable Investment Strategy
(Friday, May, 10, 2024)
|   9 mins

Welcome back to Most Significant Votes! We again bring you highlights of the key AGM decisions that matter to asset owners and on which they might wish to hold their fund managers accountable, as selected and discussed by Paul Lee, Redington’s Head of Stewardship & Sustainable Investment Strategy. This run of the MSV blog covers the main Northern Hemisphere voting season.

The North American voting season has started in earnest, so we’re seeing increased numbers of shareholder resolutions, covering a broad range of sustainability (and other!) issues. Soft drink and snacks giant PepsiCo (AGM 1st May) is one example, facing no fewer than eight shareholder proposals. Perhaps most notable was the one regarding risks arising from biodiversity and nature loss, which won backing from 21% of investors. The same result was achieved by a call for a racial equity audit at the business. Meanwhile, 17% of investors joined a request for a global transparency report on PepsiCo’s lobbying activities. Finally, a resolution seeking work to avoid the health risks associated with the use of non-sugar sweeteners, was supported by 13% of shareholders.

In contrast, arch rival Coca-Cola (AGM 1st May) only had three shareholder proposals to face. Its resolution on non-sugar sweeteners won 12% support (13% of those other than 9% shareholder Berkshire Hathaway). But the story of that AGM was actually the votes on director elections, in particular relating to two of the most over-committed of an extremely busy board. Barry Diller, executive chair of both IAC and Expedia, faced a 23% vote against (27% of those not Berkshire Hathaway), while the appointment of Thomas Gayner, CEO of insurer Markel, was opposed by 39% of shareholders (45% ex-Berkshire).

By all accounts, the meeting of Berkshire Hathaway itself (AGM 4th May) was an elegiac affair, as its builder Warren Buffett prepares for succession and following the death of his long-time associate Charlie Munger. It too faced a series of shareholder resolutions, with a particular focus on climate-related matters as this remains an area that tends to be neglected at holding company level even though it has significant exposures, not least in its energy business. The call for emissions targets and decarbonisation by that energy operation won 19% support, or 35% from those other than Buffett himself. Another proposal urging measurement and managing down of the emissions associated with its insurance business fared still better, with 22% backing, or 41% of the non-Buffett shareholders. And 21% (or 39%) supported a resolution seeking greater diversity, equity and inclusion efforts.

US bank Wells Fargo (AGM 30th April) also faced a slew of shareholder proposals, many on social issues. A call for additional efforts against workforce harassment and discrimination won 29% support, while one resolution seeking respect for freedom of association and collective bargaining, 31%, and one calling for indigenous people’s rights to be taken into account in lending, 25%. Lobbying was also an area of focus: a resolution seeking congruence between the bank’s stated policies and its lobbying activities was backed by 27% of shareholders and one simply asking for more transparency 37%, while a proposal regarding lobbying specifically on climate issues gained 30% support.

Rival Citigroup (AGM 30th April) also faced a shareholder proposal on respecting indigenous people’s rights; there, it won 27% support. A resolution requiring the bank to have an independent chair was backed by 16% of shareholders. Meanwhile, a much more unusual proposal at a financial institution, urging it to include animal welfare concerns within its lending approach, saw 9% of shareholders in support. Storied technology business IBM (AGM 30th April) was another firm under pressure on lobbying, with 37% of investors seeking transparency of these activities, and 33% specifically on climate-related lobbying. Meanwhile, 32% pressed for the firm to announce greenhouse gas emission targets. Finally, 9% of those shareholders who voted opposed the reappointment of PricewaterhouseCoopers as auditor – the firm and its predecessors have just completed a full century in that office. 31% of shareholders at US truckmaker Paccar (AGM 30th April), a Climate Action 100+ company, backed a call for disclosure on its climate lobbying.

The gloss seems to be coming off for Canada’s Barrick Gold (AGM 30th April). Investors worry about the independence of the miner’s board: in all, four directors faced opposition of 14% or more. Most notable were long-standing directors Christopher Coleman, who was on the board of predecessor Randgold Resources from 2008 and will also be seen as busy by many investors, and Brett Harvey, who has been a director since 2005. Coleman faced 19% opposition and Harvey 26% votes against. In addition, its remuneration report was opposed by 28% of investors. CEO Mark Bristow was paid $12.7 million and chair John Thornton, who has been executive but has just stood down to a non-executive role, $2.9 million. While the 6% opposition to the reappointment of the auditor PricewaterhouseCoopers seems low by comparison, it’s still a high vote on such matters. PwC has been auditor so long that it can’t actually identify the date of its initial appointment – the firm states that it has been auditor “since at least 1982”. Finally, a shareholder proposal seeking an independent audit of the company’s water impacts was supported by 25% of investors. Canada’s Imperial Oil (AGM 30th April) also faced a shareholder proposal, calling for an audit of its asset retirement obligations – also known as decommissioning liabilities. This earned only 4% headline support, though this is 19% of minority shareholders once the 70% owned by Exxon Mobil is set aside. There was accounting excitement at oil sands operator Suncor (AGM 7th May) too, which was urged by 12% of its investors to disclose the impacts of different climate scenarios on its financial statements.

Elsewhere in the world, venerable Hong Kong business Jardine Matheson (AGM 8th May) – now registered in Bermuda – remains substantially owned, and led, by the Keswick family. Percy Weatherall, a family member and former executive who started working for the business in 1976 and has been on the board since 1999, was the only non-independent non-executive director up for election. He faced a 20% vote against his re-election, or 25% of those who are not from his family. Another Keswick, Adam, faced 9% opposition to his re-election to the board of one of the Jardine businesses, Hongkong Land (AGM 8th May) – despite the name, also now based in Bermuda. This was more like 30% of the half of the shareholder base that isn’t Jardines.

The main issue in Switzerland again appeared to be pay. Most remarkable was the defeat of the say-on-pay resolution at Alcon (AGM 8th May), the eye-care firm spun out of pharma giant Novartis in 2019. Slightly more shareholders voted for the resolution than opposed it, but with a further 2% abstaining, the resolution was reported to be defeated. What was more, each member of the remuneration committee faced at least a 9% vote against their reappointment, with committee chair Karen May seeing 11% opposition. CEO David Endicott was paid more than Swfr11 million last year. At pharma business Sandoz (AGM 30th April) – the generics and biosimilars business also freshly spun out of Novartis – the remuneration report faced 12% opposition, and the resolution seeking approval for the maximum pay for the executive committee for 2024, 13%. The pay disclosures are made a little unclear by the spin-off but CEO Richard Saynor will earn Swfr10 million at maximum performance, and nearer Swfr5 million at target. Around 11% of shareholders of healthcare firm Lonza (AGM 8th May) opposed the maximum allowable pay for the executive committee.

Perhaps the most complex AGM of the year so far was at Germany’s ProSiebenSat.1 (AGM 30th April). The media firm took the extremely unusual step of postponing the vote on the discharge of two of its executive directors for the second year in a row, as the process of investigating possible regulatory breaches at two subsidiaries grinds slowly onwards. Even more startling were the voting results on challenges from a pair of activist shareholders, MFE Media for Europe (a Dutch firm that is the latest incarnation of the late Italian Silvio Berlusconi’s Mediaset) and PPF Group of Czechia. MFE proposed a spin-off of the broadcastor’s online activities, winning 71% support – though this is short of the 75% support needed for such a resolution actually to bind the company’s actions. It appears that this proposal was backed by 26% of shareholders who are not the two activists. They had more success with their boardroom proposals, with each activist proposing a director and seeing them elected with 72% support (with around 25% of other shareholders supporting), and a vote to remove the audit committee chair Rolf Nonnenmacher and replace him with a further MFE representative 61% support (it appears that MFE voted for this and PPF abstained, meaning only around 10% of independents supported this proposal). The vote to discharge Nonnenmacher was also defeated, by 52% of investors (again, around 10% of the independent investors appear to have opposed).

That’s it for this week. We’ll be back with Most Significant Votes on May 17th.

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