Seventy-one percent of surveyed investment managers voted more than 80% of their Canadian pension fund clients' shareholder proxies at their own discretion without client instructions or guidance, according to a report by the Shareholder Association for Research and Education.
The latest SHARE survey consists of proxy voting for the year ended July 1 on 34 issues — 26 management proposals and eight shareholder proposals.
In the 12 months ended July 1, 2008, 63% of responding managers voted at least 80% of the proxies at their own discretion.
“Proxy votes are an important asset of the plans,” Peter Chapman, SHARE executive director, said in an interview. “It's the trustees' duty to ensure they (the proxies) are voted appropriately in the interest of plan members. Having managers vote proxies is an acceptable process so long as trustees are active in ensuring the votes are executed in the interest of plan members and not voted arbitrarily by the managers.
“One would expect trustees are actively engaging managers to determine policies by which proxies are voted. A decrease in the number of trustees doing that is not a healthy sign. It indicates a passivity and lack of fulfillment of their obligation to plan members.”
Among other findings, 49% of the firms responding consult clients in developing their proxy voting, up from 39% the previous survey.
SHARE recommends in the report pension fund trustees establish proxy-voting guidelines, give them to managers and monitor compliance in following the direction.
The Columbia Institute, a public-policy organization that assisted SHARE with the survey, received responses from 35 firms with a combined C$353.7 billion (US$340 billion) in assets under management for Canadian pension funds, including C$54.7 billion in Canadian equities.
SHARE is an organization focused on improving institutional investment practices on behalf of Canadian pension funds.