ABP officials have adopted CalPERS-like tactics by publicly "outing" companies they believe are not managed for the benefit of shareholders. Last autumn, ABP joined forces with Stichting Pensioenfonds PGGM, Zeist, another major Dutch pension fund, in issuing a public letter condemning troubled Dutch retailer Royal Ahold NV for the generous compensation package its board offered to incoming Chief Executive Officer Anders Moberg. In the end, Mr. Moberg and the Ahold board dropped the proposed bonuses — of up to €7 million — and since have pledged that future bonuses will be linked to performance.
Dutch pension funds and other investors have also pressured ING Group NV, an Amsterdam banking group, to alter similar restrictive voting practices. "The proof that activism works is that we have succeeded," said Mr. Maatman.
In Paris, too, things are changing. Last month, Caisse des Depots et Consignations, the state-owned bank that manages pensions for government employees, announced new, more activist governance guidelines. CDC, which manages €240 billion, established a new governance committee and will seek to appoint representatives to the boards of companies in which it holds major stakes. With more than €20 billion invested in French equities, CDC is the largest or second largest shareholder in 18 of France's 40 largest companies. Major stakes include Accor SA, Alcatel SA, Groupe Danone, LVMH Moet Hennessy Louis Vuitton SA and Suez SA.
"Recent failures in corporate governance at a number of European companies show there is need for a closer watch by investors," said Philippe Puyeau, CDC's deputy director of communications. CDC plans to push for a number of governance improvements at French companies in which they invest, including independent audit, nomination and remuneration committees and separating the positions of chief executive and chairman.
CDC's new CalPERS-like approach is largely the brainchild of Francis Mayer, appointed chairman last year and now trying to modernize investment strategy and improve returns at the 188-year-old French bank.
"This is a message from the chairman to say he's got his eye on them and that they better vote the right way," said Pierre-Henri Leroy, president of Proxinvest, the Paris-based proxy voting agency that advises CDC and other pension investors.
Things are changing quickly in France. In 2003, around 10% of resolutions proposed by management were contested by French shareholders, according to Mr. Leroy. That's up from virtually zero 10 years ago. During the past two years, French investors also have removed Jean-Marie Messier as chairman of Vivendi Universal SA, fought a retooling the board at Groupe Casino SA and contested restrictive voting rights at Lafarge SA.
A fresh raft of reforms looks likely to enflame French activism even further. Private pensions will soon become allowable in France after new legislation is approved by the National Assembly, possibly before the end of this year. Planned tax incentives will also likely encourage greater private investment. And corporate governance observers expect these new entities to be more independent and more active as shareholders.