Proxy voting disclosure of non-U.S. funds: From accessible to invisible; clear to cumbersome

By Rosanna Landis Weaver and Dan McCarthy

As we begin work on our third “100 Most Overpaid CEOs” report with its analysis of how funds vote on egregious pay packages, we are also expanding the range of our research to look at non-U.S. funds.

The degree of transparency on proxy voting practices and data accessibility covers a range as vast as the globe. Many funds – including a preponderance of Canadian funds – publish their voting records in searchable databases. Others disclose this information in a more cumbersome way, but it is accessible (though one may need to use Google translate.)

Others publish only voting guidelines, or aggregated voting data. Dutch fund ABP discloses the why and how of their voting without getting to company-level specifics. For example, ABP discloses their aggregate voting data for executive compensation, noting that out of 1700 remuneration resolutions, they voted “against’ 54% of the time, and “for” 45% of the time. Further along they shed light on their rationale, “The main reasons for voting against were excessively generous severance packages, inadequate links between payment and performance and opaque schemes.”

In our review of websites we found it not uncommon for funds to focus only on voting domestic equities. Foreign equities may then be delegated to a third party, including proxy advisors or money managers. A few international funds take it a step further, declining to even vote on foreign equities at all. Given the disproportionately high pay of CEOs in the U.S. market, we believe that this is an abdication of their responsibility.

Finally, there were a number of funds that did not respond to our attempts at outreach. If you have suggestions for other funds to include please email me at I will update this post with new links as they become available.


The superannuation funds of Australia are the rough equivalent of pension funds in the United States, but with stronger government support. We reached out to several of the largest of these funds. Two that disclose proxy votes are:

First State Super

QSuper, based in Brisbane, Queensland delegates proxy voting to its “externally mandated managers the right to vote in accordance with our managers’ respective proxy voting policies.” While QSuper noted it did not disclose votes on its website at this time, the representative added in correspondence, “There are numerous changes to reporting standards for the superannuation industry that are currently being implemented and tabled for industry discussion.”


In Canadian funds (a few of which were included in the report last year) we found the best disclosure record. Though the disclosure is voluntary, it is widespread among large public sector funds, in part due to their attention to good governance and persistent efforts for transparency by responsible investor groups including SHARE (Shareholder Association for Research and Education).

“Given the importance of proxy voting to the sustainability and stability of capital markets, an argument can be made for a wider commitment to proxy voting transparency among pension plans and their asset managers,” Peter Chapman, Executive Director wrote in response to our enquiries. “The seven crown asset managers and pension funds disclose [included below] voluntarily, covering more than a dozen of Canada’s largest pension plans. All are in the public sector. “





Norges Bank, the central bank of Norway, manages the Government Pension Fund of Norway, potentially the world’s largest sovereign wealth fund. In spring 2016, Yngve Slyngstad, CEO of the fund said,  “We think, due to the way the issue of executive remuneration has developed, that we will have to look at what an appropriate level of executive remuneration is as well [as the link between pay and performance].”

Norges discloses their voting guidelines along with their proxy voting record in a database searchable by company name and ticker.

South Africa


Bundes Pensionkasse
Swiss Federal Pension Fund PUBLICA actively exercises its voting rights in respect of companies incorporated in Switzerland, and discloses “voting behavior” on its site. The Fund reports that, “Voting rights in respect of companies ex Switzerland are typically not exercised.” However, in cases where a company is incorporated in Switzerland but listed on the NYSE the fund votes on advisory votes on pay. At TE Connectivity this year, for example, the fund voted against the pay package.

United Kingdom

In the United States money managers are required to file forms with the SEC reflecting their proxy vote (NP-X filings which we used in our report.) There is no similar requirement in the UK, but it is considered a best practice for funds to provide disclosure on their websites. This is a list of funds that have signed onto the UK Stewardship Code. Principle 6 of the codes states that Institutional investors should have a clear policy on voting and disclosure of voting activity.

The clear policy, however, does not equal clear disclosure. In some cases we found language such as this from the Co-Operative Pension Scheme: “The Trustee does not generally seek to prescribe how its investment managers should vote proxies on the equity they hold on behalf of the Scheme.”

Other funds – including the Greater Manchester Pension Fund, West Midlands Pension Fund, Merseyside Pension Fund, Lancashire County Pension Fund – subscribe to research and/or voting services from Pensions and Investments Research Consultant (PIRC). One of the largest non-U.S. proxy advisory firms that cover U.S. companies, PIRC has a record of assiduously advising shareholders to vote against excessive compensation packages. However, in a number of cases there is language that allows for a case by case override of PIRC’s recommendations, and there is no way to ascertain if or when such discretion is used.

In some cases the voting is disclosed, but dated and/or cumbersome to sort out.  For example, British Airways Pension votes are provided through 2014, but are reported by only by proxy item number.

The public pension funds on the list for which we were able to find voting detail include:

British Coal Staff Superannuation Scheme (though it provides separate links with various disclosure for: Hermes, Blackrock, Schroders and Bailee Gifford.

The Northern Ireland Local Government Officers’ Superannuation Committee (NILGOSC)

South Yorkshire Pension Authority

Barnes and Noble

Annual Meeting: September 14, 2016

Barnes & Noble proxy statement released July 29, shows shareholders see the final amount of the severance received by former CEO Michael Huseby. He has resigned in August 2016 “for good reason” and received a total severance of over $15 million. In 2014, the company paid a severance of $3.6 million for the prior CEO, William Lynch, who resigned in July 2013.
Next year’s proxy statement will include the final figure on another CEO severance package. On August 16, 2016, the company announced that his replacement, CEO Ronald Boire would be leaving the company because he “was not a good fit for the organization.”

The final tally of his severance isn’t immediately clear, but his employment agreement provides details. (Thanks to @AmyLeeRosen for posting this on twitter today.) The three-year employment agreement, effective on September 8, 2015 provides that he will receive a severanace of two times the sum of his salary and bonus. Boire’s annual salary was $1.2 million. His bonus, as reported in the summary compensation table was $1.7 million. In the proxy statement issued less than a month ago, the company estimated that this cash component of a severance package would total $4.8 million.

But of course, there’s more. As employment agreements are, the language is dense. He will receive “the aggregate annual dollar amount of the payments made or to be made . . . [for] providing you with the benefits set forth in Sections 3.3, 3.6 and 3.7 above.” Let’s break those down:

• The first of these, section 3.3, is the monthly car allowance of $1,500.00, “or such higher amount as may be determined by the Compensation Committee.”

• The next Section 3.6 is general employee benefits: “including vacation, to which you are entitled under the employee benefit plans or policies that the Company provides for its employees generally, as well as any employee benefit plans or policies that the Company provides for its executive officers generally.”

Let me note, that the first part of that phrase (italicized here) is standard, but the second part is a more recent addition to the lexicon of employment contracts. That’s right kids, I’m so old that when I first started looking at proxy statements, employees and executives typically received the same benefits. (I’m not that old.)

• Section 3.7 relates to his “life insurance policy providing for a death benefit of U.S. $2,500,000.00 . . . . and (b) a disability insurance policy providing for monthly payments to you of U.S. $12,800.00 . . .” That annual disability payment would be over $153,000 a year. I don’t have the actuarial knowledge to determine how much you would have to pay to get that kind of insurance for a 55 year old man, but I expect it would be significant.

Small independent bookstores have been making a comeback lately, but the large chains are struggling. There are many theories as to why this might be. Perhaps careful readers can find some clues above.

Analysis of the vote at Blackrock

Vote analysis:
At Blackrock’s annual meeting on May 25, over 6 million shares were voted in favor of the Steven Silberstein trust proposal on proxy voting practices on compensation. Among those that publicly supported the proposal were pension giants CalPERs (the California Public Employees’ Retirement System) and OPERS (Ohio Public Employees Retirement System).

The proposal also gained the attention of the press. It has been covered by New York Times, the Financial Times, Bloomberg, the Nation, and Financial Advisor, and others.

The shares voted in favor of the proposal represented significant shareholder support, and exceeded a threshold established by the SEC that prevents low-support proposals from being refiled.
However, there were several factors that tampered the overall percentage of support.

– The largest shareholder at Blackrock, PNC which controls 21.2% of shares has a signed agreement that guarantees it will not vote in favor of shareholder proposals. Specifically, “PNC has agreed to vote all of its voting shares in accordance with the recommendation of the Board of Directors on all matters.”

– Blackrock’s attempt to have the proposal excluded at the SEC, and the extraordinary time it took for the SEC to make a decision (discussed more fully below), limited the proponent’s ability to engage on the issue. His attempts to discuss the proposal on its merits were thus turned down by ISS, Glass Lewis and a number of public pension funds. Both ISS and Glass Lewis recommended against the proposal.

– The proposal was new, and its intent may not have been clear to all shareholders. The Pensions and Investment Research Consultant (PIRC), a large European advisor, recommended against it despite their own excellent record on opposing high pay. “If the resolution were intended as a vote of censure for a perceived failure to put principles into practice and a call for a change in guidelines, it should have been framed differently.” The crafting of the language will be revisited in the coming year, though advocates fear that a proposal more explicit may have been excluded at the SEC.

– Some shareholders may have given Blackrock deference because of its power. In an analysis we completed prior to the meeting we noted that the average vote for Blackrock’s directors at the 2015 meeting was in the top 50 of all S&P 500 companies. A number of companies that received higher votes were controlled/dual class voting companies (for example, Hershey). Even on routine issues there may be an element of “Let’s not vote against Blackrock” that goes on given the complicated and complicit nexus of powerful individuals in the finance industry.

Structural issue of timing around no action letters created a significant hurdle. Blackrock submitted opposition to the proposal on January 22, 2016, arguing that even asking for a report on policy considerations was an infringement on the ordinary business of the company. The SEC did not make its decision, disagreeing with Blackrock, until April 6. The late response meant that little time for engagement, and in at least one case eliminated the option due to an advisor’s policy.

Dow Chemical

Annual Meeting: May 12, 2016

The high pay at Dow Chemical has an interesting but arcane wrinkle I want to highlight. The company reported total disclosed compensation (TDC) for CEO Andrew Liveris as $22,153,611. However, there’s a column to the far edge of the summary compensation table with a lower figure of $21,428,875.

That column, relatively new, does not include changes in pension value. It first appeared in Dow’s proxy last year when Liveris’s increase in pension and deferred compensation was over $7 million. That figure is not the total pension, but simply how much the value of the pension increased in a single year.

The company added the column “to show total compensation minus the change in pension value” because, “the change in pension value is subject to many external variables, such as interest rates, that are not related to Company performance. Therefore, we do not believe a year-over-year change in pension value is helpful in evaluating compensation for comparative purposes.” This was a pretty transparent effort to minimize the shock factor of TDC, as reported under SEC rules, going from $20 million in 2013 to $26 million 2014.

To its credit, the company kept the same disclosure this year when the story it told was different: with the pension number stripped out for both years, it shows that pay increased in 2015.

I’ve seen a number of companies this year where the figure in the pension column declined sharply and total disclosed pay declined just a bit or remained flat. In many of those cases, bonus increased. This is part of what happened at Dow Chemical: Liveris’s cash bonus (NEIC) increased from $4.2 million in 2014 to $5.7 million in 2015.

A look at past Dow proxies shows that a similar uneven change happened once before. In 2012 Liveris’s increase in pension value was over $6 million, his bonus $1.37 million, and total disclosed compensation was $22.9 million. In 2013, again due to arcane accounting rules as much as anything else, his pension only increased by three thousand dollars, but this bonus increased to $4.5 million. The TDC column showed pay as $20 million for 2013, so it looks like pay went down from the prior year, but Liveris actually walked home with more than $3 million more in cash in 2013 than he had the prior year.

This could be a coincidence, of course. One hates to imagine any party going into a board meeting and saying, in effect, “This would be a good year to give more cash, because it won’t be as noticeable.” Presumably, no consulting firm would be that corrupt, no CEO that arrogant, no compensation committee that complacent. But I think that area is ripe for research and would love to see a graduate student somewhere dig in on this.

If that research is done it should include consideration of general tenor of leadership. Note that last year I wrote about how Liveris was accused of having had the company pay for personal expenses, including his son’s birthday party (a really nice birthday party in a suite at a Detroit Pistons game).

As a larger nerdy compensation philosophical issue, I’ve got mixed feelings on how to evaluate change in pension fund increase.

In 2014, many proxy statements showed a huge increase in pension values in part because of low interest rates, and, according to a Wall Street Journal article
“new mortality tables released last fall by the American Society of Actuaries extended life expectancies by about two years.”

In a recent analysis by the Washington Post’s Jenna McGregor “changes in pension values were excluded from those figures, since the calculation doesn’t reflect the active decisions boards make each year.”

I see the legitimacy in that perspective, and in Dow’s additional disclosure, as long as it is used consistently. (Another research project: check out all the companies that included a TDC-pension column last year and see if they did it this year.)

At the same time, the change in pension value does reflect real money. To not consider it at all in pay analysis is a disservice to those who don’t have such pensions, which presumably is why the SEC requires it. Liveris’s current pension is worth $34.5 million, and he has deferred compensation of $2.8 million.

He’ll be making use of this money soon. Liveris has announced a planned departure after the Dow/DuPont merger and subsequent split has been accomplished. Activist investor Dan Loeb had called for his removal.

In any case, this is the bottom line: whether you include change in pension value in looking at pay at Dow or exclude it, Liveris is overpaid.

Discovery Communications

Annual Meeting: May 19, 2016

I was not planning to write about Discovery Communications this morning. But yesterday, shortly after 4 o’clock the company filed with the SEC an 8-k announcing that it would be making “personnel adjustments.” In other words, buyouts and layoffs, described in a letter to employees as “cost-reduction efforts.”

The company moved up my priority list. CEO David Zaslav of Discovery Communications was Number 1 in our list of overpaid CEOs in our report released in February. The headline practically writes itself, “Most overpaid CEO in America announces job cuts.”
Zaslav’s total disclosed compensation of $156,077,912 for 2014 included estimated excess compensation $142 million based on the regression analysis.

For 2015, his reported pay fell because the amount of stock options and awards fell. However, it remains over $32 million. Zaslav is tremendously overpaid, with a salary last year of over $3.1 million and a cash bonus of over $6.9 million. The CtW Investment Group, in a filing advocating a vote against two directors, writes that,

“According to compensation research firm, Equilar, the firm’s executive compensation tool ranks the pay-for-performance failure at Discovery worse than 92 percent of companies in the R3000: while three-year TSR is at the bottom of the peer group (9th percentile), three-year CEO target pay is at the 84th percentile. The compensation plan has the following negative attributes: a hefty annual salary of $3M that is guaranteed until 2019, largely subjective annual bonuses, outsized equity awards, risky pay-for-failure severance arrangements, and excessive perquisites including tax gross-ups on aircraft use by family members.”

This letter, which also details the incestuous nature of the board is worth reading in its entirety.

In addition to pay reported in the summary compensation table, Zaslav realized $24.6 million through the exercise of stock, and another $34 million through shares acquired on vesting.

All of this while the stock price is down – over 30% since August 2014.

Discovery Communications was such a stand out last year, that I was asked how the company could justify the excessive pay to the shareholders. My quick answer was that because of the vote structure and ownership the company doesn’t particularly have to. It has a complicated stock structure with Series A, B, & C common stock and series A & C preferred stock. Each share of Series B common stock – owned almost entirely by John Malone – gets ten votes.

There are three tranches of directors elected by difference combinations of stock. Directors are extremely well paid, each earning more than $200,000. Board members are paid extra for serving on committees and even more for chairing them, and the company notes that expenses for attending meetings including airfare will be reimbursed “whether by commercial aircraft or private plane.”

Given that these directors are in an industry that is going through tectonic changes, I was interested in noting that four of the five directors up for election this year were born in 1950 or earlier.

Board members are insulated and entrenched. Millions of families – including mine – are debating cutting the cable cord. Cost cutting has begun.

Zaslav’s letter to employees concludes, “Through this process, it will be more critical than ever to work together with the respect, encouragement and forward-looking approach.”

Perhaps one way to Zaslav could exhibit respect and encouragement would be to revisit the absurdly high level of his own pay.

General Dynamics

Annual Meeting: May 4

General Dynamics appeared on our overpaid list last year for many reasons, but one outstanding feature was the large bonus that was apparently not tax-qualified. As you may know, every summary compensation table contains two columns that cover two kinds of bonuses: one that says bonus and the one that says NEIC (Non-Equity Incentive Compensation). The latter is much more common because as long as it meets the threshold of “performance based” under SEC definitions – a low bar – it is deductible under Section 162(m). For the most part boards and CEOs considered the nominal link to performance a small price to pay for tax deductions.

But not at General Dynamics. In 2014, Phebe N. Novakovic’s package of $19,388,084 included $4.25 million in a bonus. In 2015, the total increased to $20,424,104 and there was an increase as well in the presumably non-tax deductible bonus to $4,850,000.

It appears, however, that the board must have heard from shareholders. “In March of 2016, the Committee recommended, and the Board approved, subject to approval by the shareholders at the Annual Meeting, the General Dynamics Corporation Executive Annual Incentive Plan that supports the deductibility of payments made under the bonus component of total cash compensation. This change will affect any potential bonus payment that will be made in 2017 based on 2016 performance.”

I expect shareholders will support the tax-avoidance 162(m) plan, but many will likely vote against the excessive pay package again this year.

American Express

Annual Meeting: May 2, 2016

Kenneth Chenault of American Express has been on our overpaid CEO list for the last two years. The fundamental problems remain this year: Chenault’s pay of $21,988,091 is significantly above peers and includes problematic elements including outsize salary and high retirement pay.

I’ve been surprised, personally, at level of support the advisory vote proposal received in 2015: 96.5 percent of shares were voted in favor. I expect this year will be different, the stock price has fallen significantly.

Total disclosed pay is down slightly, but not significantly. This year Chenault received no cash bonus but his stock awards were valued at $16.3 million compared to $12.4 million last year.

William Ryan, an analyst at Portales Partners LLC noted that pay at American Express is “high relative to the company’s subpar performance in 2015.”

This morning’s vote will provide an interesting look at whether rubber-stamp approval continues in these circumstances.


Annual meeting: May 5

Both ISS and Glass Lewis recommended that shareholders vote against pay on the advisory vote at Allergan, for a number of excellent reasons. One prime example is the fact that, CEO Brenton Sanders received an extraordinary $20 million dollar bonus – but no equity awards – as part of his pay package.

However, I want to write today about a somewhat obscure and offensive elements of pay practices that was one rationale for the recommendation: the tax gross-up. (Skip the next five paragraphs if you know already know all you ever want to know about how tax policies are manipulated in favor of executives.)

The tax gross-up is often referred to in the shorthand of tax code jargon it was a response to, Section 280G, and it is a lesson on the unintended consequences of trying to reform pay legislatively. The creators of the rule had every good intention. They saw excessive severance packages and decided, essentially, “Let’s come up with a really costly punishment for executives and companies who have ridiculous obscenely high golden parachute severance packages for CEOs.” So an excise tax, a big extra tax, was set on any package over three times five-year average pay. Not only would the executive have to pay the tax, the company would lose the tax deduction.

Though three years of pay seems like more than enough to cushion a transition to the next job for most of us, it wasn’t enough for many executives. Severance packages grew, and language that seemed insignificant (let’s say “3 times salary and highest bonus instead of most recent bonus”), had significant consequences. Compensation consultations came up with a solution: the tax gross-up. Employment contracts began to include language that said that in addition to the severance payment itself, the company would pay taxes on the payment — or gross up the package –and taxes on the taxes, until the CEO was “made whole.”

The practice spread like wildfire, and for the most part shareholders were unaware of the cost or the extent of the practice. That changed in 2006 when enhanced disclosure required companies to estimate the costs of such packages. Following the revelations of the astonishing amounts involved, institutional investors pushed back. Some filed shareholder proposals, which gained support every year. When “say on pay” joined the scene, proxy advisory services identified the presence of such a loophole in an employment contract as a problematic practice and began voting against pay at such companies.

And nearly as quickly as it spread, the practice began to disappear. Company after company took such language out of contracts (sometimes giving executives an incentive to sign a new contract). The common formulation of “What we do” and “What we don’t do” proudly trumpeted the removal of the gross-ups.

It seemed as if reform was happening, but in some cases the reform was a mirage. There was nothing enforceable in these policy changes. Occasionally lately, we’ve noticed that when a merger takes place the board reverses its previous policy and adds gross-ups back in.

This brings us back to Allergan, and its own self-justifying support of the practice. As the now-cancelled merger with Pfizer approached, the company added the provisions to contracts. In an SEC filing disparaging the proxy advisors Allergan argues that they don’t normally have such tax reimbursement “arrangements in the ordinary course” but added them just for the upcoming merger. Now recall that such provisions are only triggered in a merger.

In other words, we’ll only put this bad practice on the books when it help our executives get more money.
I expect the vote against pay at Allergan to be high this year.


Annual meeting: April 27, 2016

Ameriprise has been on our overpaid list for the past two years. For the 2014 study it was ranked number 31, with the regression analysis suggesting that CEO James Cracchiolo was overpaid by $7.6 million. For the 2015 study, Ameriprise was ranked number 46, and the excess pay from the regression was an estimated $9 million.
During the most recent fiscal year the stock has fallen more than 20%. Total disclosed compensation for CEO James Cracchiolo for 2015 was $20,671,971, reflecting a decrease in bonus, but an increase in salary.

Given that Ameriprise has consistently paid higher than peers, make this a company where a vote against is not only justified, but likely.
I thought I’d take the opportunity to see how some of the funds that disclose their votes have voted. ( again has the best resource for this).

I was surprised to find that a number of funds who offer disclosure did not yet have votes listed, despite the fact that the vote is tomorrow. As of this afternoon, no votes were listed on Ameriprise at CalPERS, CalSTRS, and COPERA. I know only too well how overwhelming proxy season can be, but to be cutting disclosure this close this early in the season is a problem.

Of those where votes were disclosed the Florida SBA and the Ontario Teachers’ Pension Plan had voted against the pay package. The Teachers Retirement System of Texas was the only fund I found with a vote in favor of pay at Ameriprise.

Lockheed Martin

Annual Meeting: April 28

CEO Marilyn Hewson’s total disclosed compensation for 2015 was $28,566,044. Every element of pay increased: salary, stock awards, and bonus (up by more than $2 million to a total of $9 million). The only element that decreased was the accounting/actuarial assessment of pension value. In 2015, Hewson’s pension increased by $8.4 million rather than the $15 million it increased last year.

Why is pay so extraordinarily high at Lockheed? The company says it seeks to pay market rate. To do so it relies on “Similarity in size (a high correlative factor in determining pay)” based on revenue.

The Compensation Committee is quite explicit in noting that it does not — as many companies do — rely on market capitalization when identifying peers, “because market capitalization can change quickly as industries and companies go in and out of favor as investments and as companies restructure. “ Lockheed Martin’s market capitalization is $69.1 billion, putting it at less than half the market cap of many companies including Coca-Cola, Merck or Home Depot. However, on the basis of revenue it ranks in the top 75 companies. But I’m sure that has nothing to do with why they compare themselves to companies of similar revenue rather than companies of similar market capitalization when setting pay.

A study sponsored by the IRRC Institute published in November 2014 notes that a significant variation in pay is linked not to performance but to company size. The study found that: “Economic performance explains only 12% of variance in CEO pay. More than 60% is explained by company size, industry, and existing company pay policy. None of those are performance driven.”

To some extent a link between company size and pay makes intuitive sense: certainly someone running a start-up would expect to be paid less, and differently, than the CEO of a large, complex, multinational company. At this level, however, all companies are large, complex, and multinational. It is at that point where one can question whether executives are likely to leave Apple to join Exxon Mobil. This is particularly the case with an executive like Hewson, who has spent the greater part of her career at Lockheed Martin.

Lockheed Martin’s slogan is “we’re engineering a better tomorrow.” One has to wonder if, in picking comparator companies, Lockheed is engineering ever-higher CEO pay.