Most Significant Votes (w/e 17th May 2024)

Paul Lee

Head of Stewardship & Sustainable Investment Strategy
(Friday, May, 17, 2024)
|   8 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 threshold for proposing shareholder resolutions in Norway is relatively low, and Equinor (AGM 14th May) faced eight of them. Though it is transitioning, it remains a fossil fuel company and on the Climate Action 100+ list; the shareholder proposal from CA 100+ participating investors, which called for a strategic update and capex to match the goals of the Paris agreement, was the most widely supported even though the headline support was only 7% – though this represents 30% of investors other than the Norwegian state, which retains 67% of the shares. A proposal from NGOs Greenpeace and WWF asking that climate competence be taken into account for future board candidates gained 4% support – or 18% other than the state. Swiss-based cement giant Holcim (AGM 8th May) saw just 5% opposition to the advisory vote on its climate report – the so-called ‘say on climate’ resolution – a pretty strong endorsement of the approach of this CA100+ company.

Duke Energy (AGM 9th May) appeared to be a rare example where a campaign against an individual director had a noticeable impact. Campaigner Majority Action called for votes against chair of the governance committee Theodore Craver given the utility’s misalignment with the goals of the Paris Agreement. The 10% vote against his re-election was notably high. Meanwhile, a shareholder resolution seeking higher retention of stock by executives won 37% backing.

Similar Majority Action campaigns at utilities Dominion Energy (AGM 7th May) and WEC Energy (AGM 9th May) seem to have had rather less impact, though a call at Dominion for an independent chair gained support from 40% of shareholders. A request that the chair of General Electric (AGM 7th May) be independent won 16% backing. Canadian oil pipeline business Enbridge (AGM 8th May) faced two shareholder proposals. One gained very little traction, perhaps because its wording alleged that the company regularly releases false information or otherwise misrepresents its climate impacts (Enbridge said the proposal was “incendiary, accusatory and is clearly not in the best interests of shareholders”). The second, seeking disclosure of material Scope 3 emissions, was much more successful, earning 28% support. Meanwhile, PricewaterhouseCoopers has been the company’s auditor since 1992, and has audited a major subsidiary since 1949. 10% of shareholders deemed this long enough and opposed the firm’s reappointment.

Elsewhere in North America, at Canadian railways business CSX (AGM 8th May) investors have concerns as to whether the chair has sufficient time to devote to the company. Not only is John Zillmer CEO of food service giant Aramark, he’s also on the board of a further public company. 25% of shareholders opposed his re-election. Perhaps surprisingly given that there were three fatalities at the company over the year (following two years with none), a much smaller number supported a shareholder proposal seeking a board-level safety committee: only 8% backed this call.

US-based taxi business Uber (AGM 6th May) also faced a safety resolution – a shareholder call for an audit of driver health & safety. This won 9% support. More notable was the vote on David Trujillo, the non-executive director representing private equity investor TPG. Shareholders doubt his commitment to the role as he failed to meet what tends to be seen as the minimum of 75% attendance at board meetings. Despite protestations from the company about his commitment and value to the board, 44% opposed his reappointment. There was also a safety resolution at Verizon Communications (AGM 9th May), this time regarding lead in the telecoms firm’s old cables. 17% of investors backed a call to review these exposures. A number of the other proposals at the company related to political expenditures and lobbying – perhaps most notable was the 36% support for transparency of its lobbying activities.

German fashion firm Hugo Boss (AGM 14th May) received a notable slap on its wrists, apparently for being slow in exiting the Russian market in spite of the sanctions following the country’s invasion of Ukraine. Even after the sale of its Russian retail operations announced last month, Hugo Boss will continue to supply the wholesale market there; media stories suggest it turned over tens of millions of euros from such activities in 2023. The company reports a 19% vote against the discharge of its supervisory board, but isn’t transparent about the level of abstentions; reverse engineering of that number, and setting aside the votes of 15% strategic investor PFC/Zignago suggests that 53% of shareholders declined to back the resolution.

Meanwhile, 31% of investors opposed the remuneration report resolution – or 41% of those other than PFC/Zignago. French engineer Technip Energies (AGM 7th May) was in a similar place, criticised for the timing and way it exited from a Russian LNG operation; 21% of shareholders, or 31% of those other than its strategic investors, declined to back the discharge resolutions there (again, many abstained).

Independent shareholders had concerns about family dominance of the boards of a number of companies. At German carmaker BMW (AGM 15th May), the Quandt family holds nearly 50% of shares. Two family members were up for election: deputy chair Stefan Quandt faced saw 22% of shareholders vote against, or a bare majority of those not from his own family, while his sister Susanne Klatten fared a little better with 14% opposition (32% other than the family). Meanwhile, Antofagasta (AGM 8th May), a venerable Chilean copper miner whose London incorporation dates back to 1888, is controlled by the Luksic family. The 5% vote against chair Jean-Paul Luksic is more like 21% of independent shareholders when the 70% of votes controlled by the family’s various foundations are set aside. His brother Andronico fared worse: the 9% opposition to his re-election looks more like 37% from those other than his own family.

The founding Hayek family retains 43% voting control at Swatch (AGM 8th May). Other shareholders are unhappy about almost everything at the company, no doubt not least in the light of a 30% share price fall in the last year. There also continue to be allegations about anti-competitive behaviour – which presumably led to the 27% who refused to grant the board discharge (67% of those not called Hayek – more than half of them abstaining). No member of the board received more than 86% support for their re-election, and once the Hayek holding is excluded, this looks like at least 35% of independents voted against; most notable was the vote on chair Nayla Hayek, which saw 28% opposition on a headline basis, and more like 69% once the family votes are set aside. PricewaterhouseCoopers has been auditor of Swatch since at least 1992. Many outside investors clearly feel this is long enough, with the 14% vote against their reappointment representing 34% of the non-Hayeks.

Something similar was seen at Chinese tech giant Tencent (AGM 14th May) – listed in Hong Kong – though there the board structure concerns arise not from family dominance but that of a strategic investor. While five of the eight directors are stated to be independent, the two acknowledged non-independent non-executive directors – not independent because of long tenure and their roles at major shareholder Naspers – hold key positions on board committees, including the audit and remuneration committees. One of these, Charles St Leger Searle, was up for re-election and faced 15% opposition, or 28% from the shareholders other than Naspers and founder and chair Pony Ma.

Otherwise in Europe, once again it seems to be largely a question of pay. Most striking were the results at German real estate company Vonovia (AGM 8th May) where the remuneration report faced 43% opposition, and the forward-looking policy for the executive management 63% (including 9% abstentions). CEO Rolf Buch was paid €5.2 million despite a challenging year for performance with valuations under pressure – around 74 times the €70,000 average pay at the firm. Less dramatically in Germany, 27% of the shareholders of airline Lufthansa (AGM 7th May) opposed its remuneration report, 14% at carmaker Mercedes-Benz (AGM 8th May) and 16% at insurer Allianz (AGM 8th May). UK gambling firm 888 (AGM 13th May) – renamed evoke plc by the AGM – saw a 12% vote against its remuneration report, or 17% from those other than the founding Shaked family. This appears to be in relation to the treatment of departing executives, ousted early in the year following underperformance, and the increased reward level set for the incoming CFO in particular.

That’s it for this week. We’ll be back with Most Significant Votes on May 24th.

Interested in leveraging these insights and others to hold your investment managers to account more effectively? We’d love to discuss how. Get in touch

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