The Public Sector Pension Investment Board (PSPIB), one of Canada's leading pension managers, often supports shareholder proposals, and sometimes voting against management, as part of its responsible investing efforts, according to a report published Tuesday.
The report from Ottawa-based PSPIB details the initiatives the fund manager has undertaken over the past year to promote responsible corporate behaviour, and to and integrate environmental, social and governance (ESG) factors into its investment decision making.
Among other things, the report sets out PSPIB's proxy voting record and its governance priorities. According to the report, the fund manager voted against management resolutions, or abstained, approximately 9% of the time (covering 40,625 management resolutions).
Issues relating to board independence and effectiveness accounted for 46% of the contrarian votes from PSPIB.
"During fiscal year 2017, we withheld or voted against selected board nominees due to lack of independence, non-separation of the roles of chair and CEO, poor attendance records and/or time commitment issues," the PSPIB report says.
Executive compensation accounted for 24% of PSPIB's votes against management. The fund manager voted against several compensation-related proposals that "were misaligned with performance or failed to adequately disclose performance conditions," the report says. "We also voted against several overgenerous or ‘single-trigger' severance compensation arrangements (golden parachutes) for executives that would have resulted from a proposed merger or acquisition."
Capital structure issues represented 14% of PSPIB's anti-management votes, where it opposed proposed changes to capital structures, "because of dilution issues that were not justified by business considerations."
Other issues include auditor irregularities, takeover proposals, and shareholder rights plans.
Additionally, PSPIB supported 43% of the 1,287 shareholder proposals that it voted on during the year, the report indicates. In particular, the fund manager supported resolutions to improve proxy access for shareholders; proposals that enhance executive compensation disclosure; proposals that aim to increase board accountability on sustainability and environmental issues; and proposals to enhance disclosure of corporate lobbying and political activity.
PSPIB also engaged directly with companies on some of these issues, including board independence, majority voting, executive compensation, disclosure, and risk management, along with a variety of social and environmental issues, the report notes.
PSPIB, with $135.6 billion of net assets under management, invest funds for the pension plans of Canada's public service, the Canadian Armed Forces, the Royal Canadian Mounted Police and the Reserve Force.