Glass Lewis has made available to clients a set of four new season reviews: Latin America, UK, Canada, and Asia. Each of these reports focuses on governance concerns and trends, changing regulatory environments, vote results, and several notable instances of an increasingly more powerful, vocal and active shareholder base.
For example, the Latin America report discusses challenges faced by shareholders at Petrobras S.A.’s AGM, where minority and foreign shareholders, lacking access to effective voting mechanisms, were impeded from fully exercising their voting rights in Brazil. On the other hand, Gafisa S.A.’s annual meeting became one of Brazil’s closest renditions of a genuine proxy fight, with minority-shareholders exercising their rights under Brazilian corporate law and CVM regulations to successfully elect four minority-shareholder representatives to the board. Boardroom and proxy voting drama weren’t the only takeaways from the season; our review acknowledges an improvement in the structure and disclosure of Brazilian remuneration policies and a surprising number of Brazilian issuers who have gone green by linking pay and sustainability.
The UK, of course, has gone through a turbulent proxy season dubbed the “shareholder spring.” Our UK review focuses on voting outcomes of director and remuneration proposals to examine shareholder opposition and engagement. We analyze the record four failed remuneration votes at FTSE 350 companies, as well as the unscheduled departures of chief executives from AstraZeneca, Aviva, and Trinity Mirror. In addition, we discuss the results of recent emphasis on increasing gender diversity in the board room, the implications of the Government’s new binding pay proposals, and a new form of long-term incentive that is gaining attention among investors and issuers.
In Canada, there too was an increase in shareholder activism and opposition seen at this year’s shareholder meetings. Focusing on the S&P/TSX Composite Index, the review covers some of the more noteworthy issues we observed in the context of director elections and executive compensation practices, as well as some of the most interesting examples of shareholder activism, including the contested meetings of Canadian Pacific Railway Limited, Telus Corporation and others. We also discuss the increasing shift towards restricted stock plans in place of traditional stock options and the most problematic features we observed.
Our Asia review has particular focus on Korea, Japan, Taiwan and Hong Kong. The primary challenge for investors in these markets has historically been limited or untimely disclosure. While disclosure has clearly improved, Asian markets must continue to improve their corporate governance and ensure a more transparent disclosure system. In general, this region continues to suffer from numerous governance concerns, including board independence, the role and responsibilities of a remuneration committee, the structure of equity plans, cross-shareholding structures, and the potential to abuse the authority to issue shares. Despite these lingering issues, many positive strides have been taken toward improving corporate governance and transparency. In particular, we applaud Korea for setting legal provisions for independent directors with professional relationships and HKEx for setting an example by adopting a significantly lower limit than required for its General Mandate. In Taiwan, more timely enabled shareholders to have more sufficient time to review meeting agendas and cast their votes.
Glass Lewis clients can access these new Season Reviews at GlassLewis.net, or they can contact their Client Services Manager.
All others who wish to view the report can send a request to purchase the report via info@glasslewis.com