Norges Bank calls for end of LTIPs
The chief executive of Norges Bank which houses Norway’s sovereign wealth fund through its investment arm, has called for long-term incentive plans to be scrapped. He told reporters: ‘For us long-term incentive plans should be removed from pay packages. The packages we want in the future are very different from what they are now. They are too complicated… We want simplicity.’ His comments are line with LAPFF’s policy position, held since 2013, which is that such schemes should be phased out.
Shareholder concerns over pay continue during AGM season
Executive pay continued to make the news with reports that WPP have moved to curb CEO Sir Martin Sorrell’s future pay outs
to reduce further disputes with shareholders. Meanwhile Aggreko withdrew planned changes
which would have introduced a new Directors Remuneration Policy and a new restricted share plan after the level of support from shareholders was lower than expected. Satellite company Inmarsat narrowly avoided defeat
over pay by its shareholders with 49% voting against its remuneration report (and 53% when including abstentions refusing to back the report). BT has cut its chief executive’s pay package by £4m
too as a result of an accounting scandal. The company has also revealed that it will cut 4,000 jobs worldwide.
Fund firms ease proxy pressure amid business ties according to new study
According to a new study, whilst shareholder resolutions calling on companies to address climate risks have received unprecedented support, asset managers have frequently voted in favour of management and failed to support the resolutions
. The report
by 50/50 Climate Project also found voting practice was even more management-friendly at companies which they had business relationships.
Major companies and investors call on G20 to act on climate change
The chief executives of 27 global business
, including HSBC and Unilever, have called on G20 governments to adopt recommendations that call on companies to disclose climate-related financial risks. The business leaders, representing $4.9 trillion AUM, issued an open letter to G20 nations to impose actions that promote transparency. Similarly a letter signed
by LAPFF and 200 global investors (representing $15 trillion AUM) urged the G7 to stand by the Paris Agreement and push ahead with its implementation.
Investors secure landmark climate risk win at Occidental
LAPFF has issued a number of voting alerts, such as the one for Southern Company
, backing shareholder resolutions requesting companies undertake analysis and publish reports on climate change impacts consistent with the Paris Agreement. A recent shareholder meeting saw for the first time a climate change resolution passed
at a major US oil and gas company (Occidental).
NRG Director Re-elected Despite Opposition
LAPFF also issued a voting alert on the re-election of one of NRG Energy directors, Barry Smitherman. Mr Smitherman had made comments stating that climate change was not real and that he was ‘battling’ against what he described as the climate change ‘hoax’, positions which not just went against LAPFF’s views on climate change but also the company’s. In the end, a higher than usual number of (7.5%) of votes were to oppose the re-election of Mr Smitherman.
ESG integration helps returns and reduces instability survey finds
According to an investor survey conducted by State Street Global Advisers
, integrating environmental, social and governance factors into investment policies generates returns and reduce volatility. The survey of 475 institutional investors from around the globe found eight in 10 were satisfied or very satisfied with returns from ESG investments and seven out of 10 indicated that ESG strategies had assisted in keeping volatility in check. Similar findings were found in a survey of investors conducted by EY.
They found an increased interest in non-traditional financial information and enhanced focus on ESG factors (which had moved from governance issues to an equal interest in environmental issues, primarily climate change).
Financial Choice Act set on reform to US financial regulations, including on shareholder proposals
The US House Financial Services Committee has voted in favour of the Financial Choice Act
, which would exempt some financial institutions from capital and liquidity requirements. It would also introduce a new bankruptcy code provision intended for large financial institutions after criticism that Obama’s reforms reinforced the idea that some banks were too big to fail. Tucked away in the detail, however, are reforms which would drastically increase the ownership requirements for filing shareholder proposals
. The bill has been hailed by Republicans as replacing the Dodd-Frank regulations which they see as strangling growth. However, Democrats are set to oppose its current form with one Congresswoman arguing that ‘it would bring harm to consumers, investors and the whole economy.’
Wells Fargo directors re-elected despite shareholder disquiet
Shareholders re-elected all the directors at Wells Fargo
, the company embroiled in a scandal which saw staff create fraudulent accounts. However, some directors were narrowly re-elected including the board chairman and three members of the board’s corporate responsibility committee, all receiving the backing of less than 60% of the votes. LAPFF issued a voting alert
on Wells Fargo recommending member funds support a shareholder resolution requesting a review business standards following the scandal, which has led to significant fines. The resolution received 22% of the vote
21st Century Fox face scrutiny for second high-profile sexual harassment scandal
As the lead up to the decision on Rupert Murdoch’s 21st
Century Fox bid for Sky hots up - a matter that LAPFF has been heavily involved in company engagement over in the recent past - Bill O’Reilly, the Fox News star, has been fired amid a growing sexual harassment scandal at the 21st
Century Fox subsidiary. Revelations that Bill O’Reilly was likely to receive as much as $25m dollars as part of his exit package have been met with ‘outrage.’ This follows another high-profile case last year involving Roger Ailes the network’s former chairman, who received $40m pay out. The New York Times
reported that the total amount of paid out by 21st
Century Fox related to sexual harassment allegations at Fox News was now more than $85m – with as much as $65m in exit packages. These revelations are also being heard first-hand by Ofcom
in relation to 21st
Century Fox’s takeover bid for Sky. A former news guest who made sexual harassment allegations met with Ofcom in London and is arguing that the culture at Fox News casts doubt on 21st
Century’s ability to satisfy takeover rules. The news channel is also facing further legal troubles after employees issued a suit alleging racial discrimination and harassment