Welcome back to Most Significant Votes. Once again, Paul Lee, Redington’s Head of Stewardship & Sustainable Investment Strategy, highlights the key AGM decisions that matter to asset owners and on which they might wish to hold their fund managers accountable. This run coincides with the Northern Hemisphere voting season.
A series of meetings in the US and elsewhere had been flagged as part of the Climate Action 100+ proxy season process. There was strong endorsement for the setting of climate targets by building materials firms Martin Marietta (AGM 11th May): fully 35% of investors backed a shareholder resolution seeking greenhouse gas emissions reduction targets to be set within a year. Meanwhile, 26% opposed the resolution on executive pay. Meanwhile, Warren Buffett’s investment conglomerate Berkshire Hathaway (AGM 6th May) is becoming somewhat of a cause celebre as, despite its high carbon intensity, the firm overall refuses to set a climate strategy or plan, insisting that its operating entities should each hold responsibility for the issue. Unsurprisingly it faced a series of climate-related shareholder resolutions. Most successful was that promoted by investment giants CalPERS and Caisse des Depot et Placement de Quebec, calling for an annual TCFD report by the company. This was backed by 27% of shareholders, or the barest of majorities of investors other than Buffett himself. A second proposal, arguing for alignment of the firm’s insurance activities (across underwriting and investment) with the goals of the Paris agreement, won support from 23% of shareholders, or 43% of the independents. Finally, a resolution seeking better disclosure of the outcomes of the company’s diversity, equity and inclusion activities was supported by 21%, or 41% of the independent investors. As well as noting these shareholder resolutions, Climate Action also flagged the CalPERS ‘vote no’ campaign on long-standing audit committee members because of poor climate risk disclosures. Of these, Susan Deckers received the largest vote against (at 14%, or 26%), but from the voting patterns only a small proportion of that vote seems to have been driven by the climate concerns.
The meeting of US oil player Valero Energy (AGM 9th May) was also flagged by Climate Action. There, a shareholder proposal seeking emissions targets that would meet a well-below 2 degree scenario was backed by 36% of shareholders. Again it is hard to identify any clear success from a similar ‘vote no’ campaign on three long-standing members of the sustainability and public policy committee because of a failure to engage on climate matters: while each faced 8-10% opposition, this was not notably different from (and in some cases, lower than) the votes against other directors on the board. Similarly ineffectual was a public campaign about German car giant Volkswagen (AGM 10th May). While the closely-held nature of the shares, and their gerrymandered voting rights, mean minority investors will never register significantly in the votes cast, even a generous reading of the numbers looks like the largest vote against any of the company’s proposals was no more than 3% of independent investors.
Another CA100+ company – though not one flagged among its voting focuses – is Cummins (AGM 9th May). There, a shareholder proposal calling for executive pay to be linked to CO2 emission reductions received 16% support. More favoured was a resolution calling for an independent board chair, which was backed by 44% of investors. Last year, former chair/CEO Thomas Linebarger stood down as CEO – in favour of successor Jennifer Rumsey – but has remained as executive chair of the board. Another popular call for an independent chair was seen at American International Group (AIG) (AGM 10th May), where 43% of shareholders supported the same resolution. Meanwhile, the company faced defeat on its resolution to approve executive pay, which was opposed by a notable 68% of investors. CEO Peter Zaffino was paid $75 million in 2022, including a special award of more than $50 million – leading to a ratio of his pay to that of the median employee of nearly 900 to 1. Further, compensation committee chair Linda Mills faced 13% opposition.
Surprisingly, there seemed little voting consequence for Norfolk Southern (AGM 11th May) from the horrific derailment in February of one of its trains at East Palestine in Ohio. The 13% vote against safety committee chair Michael Lockhart may possibly be attributable to investor concerns about this. However, the votes on both chair Amy Miles (the former CEO) and current CEO Alan Shaw were overwhelmingly in favour, with no shareholders even choosing to abstain on the resolutions while investigations into the accident continue.
Storied carmaker Ford (AGM 11th May) remains controlled by the founding family, whose Class B shares wield 40% of the votes at the AGM – meaning each had nearly 37 votes at this year’s meeting. A call for this to be changed and for all shares to have equal rights won 36% support, or fully 86% of the independent shareholders. A shareholder resolution seeking more disclosure on the company’s exposure to child labour risks was less well supported, but still received 9% support, or 22% of those not named Ford.
Historic US insurer Chubb (AGM 17th May), now Swiss-incorporated, faced two shareholder resolutions. The climate one, seeking greenhouse gas emissions targets on the company’s insurance operations, won 30% backing. The second was seeking integration of human rights matters – the supporting statement particularly focused on the rights of indigenous peoples – into underwriting, and was supported by 17% of investors. In contrast, UK insurer Legal & General (AGM 18th May) received strong support for its climate transition plan. It won 95% backing from shareholders, with only 2% opposing outright.
Drinks bottler Coca Cola HBC (AGM 17th May) displeased investors over pay. The 32% vote against the remuneration report is all the more notable given that the company is 21% held by Coca Cola itself, meaning this is nearer to 44% opposition. The vote is no better than the sizeable opposition last year, meaning that the significant outreach that the company reports following the 2022 vote has had no success in bringing views together. Perhaps unsurprisingly therefore, remuneration committee chair Charlotte Boyle faced a 25% vote against her re-election, 35% of the independent shareholders. Independent shareholders also raised concerns about pay at London-listed Chilean copper miner Antofagasta (AGM 10th May). The 5% vote against the remuneration report, and 6% against the remuneration policy are closer to 21% and 24% of the independents once the holdings of the Luksic family and associated investors are excluded. Similarly, the 5% opposition to the reappointment of chair Jean-Paul Luksic looks more like 21% of the independent shareholders.
More unusual was the 9% opposition to the appointment of Deloitte as auditor of National Express (AGM 10th May) – remarkable for votes that normally receive near-universal support, particularly where as here the major proxy voting advisers recommended votes in favour. This is a reduction in opposition from last year’s 15%, which I attributed to fall-out from the audit firm’s perceived failures at sector peer Govia Thameslink.
UK construction firm Balfour Beatty (AGM 12th May) faced some significant dissent. Its new pay policy roused some ire, with 19% of shareholders voting against. Still more remarkable was the 22% opposition to the re-election of the chair, Lord (Charles) Allen. More than 22% of shareholders – including 7% who abstained – declined to support his reappointment, apparently because of the limited gender diversity on the board (30%, less than expectations for the UK nowadays) and among senior management. More equivocal was the vote at fund manager abrdn (AGM 10th May), where shareholders growled but did not bite: on each of the remuneration report and policy, 21 percentage points of the dissent (26% and 25% respectively) were abstentions. On the same day, a similar voting pattern greeted the remuneration report at smaller UK rival Jupiter, with 5% votes against and 25% abstained.
Finally, UK managed offices firm IWG (AGM 10th May) had a bruising AGM. Its remuneration report was opposed by 22% of shareholders, or more like 34% once the holding of founder CEO Mark Dixon is excluded. The remuneration policy fared a little better, with 13% opposition, or 20% of those other than Dixon. However, remuneration committee chair Nina Henderson – seen by some investors as a serial offender in this regard – faced personal ire, with the 18% vote against her reappointment looking like 27% of the independent shareholders.
We’ll return with Most Significant Votes on 26th May.