Many KiwiSaver managers in New Zealand pay lip service to Stewardship (in our opinion). Many KiwiSaver managers say that they vote, but based on the publicly available information, they take the recommendations of their proxy fund managers and just vote based on what they have been told.
While there may be some direct interaction with companies and issuers when looking at specific issues and offers, there is a dearth of information on what KiwiSaver managers do in terms of active engagement and voting - ie stewardship.
The new Aotearoa Stewardship Code will hopefully get KiwiSaver managers to lift their game over time as many of the KiwiSaver managers are signatories.
Setting aside the work that Pathfinder KiwiSaver does in Stewardship, we are focusing on another KiwiSaver manager that produces a terrific report each year showing the depth of analysis and work that they put into their voting.
Generally fund managers and KiwiSaver managers have a proxy voting manager. This manager will probably provide research as well, but one of the main things that they do is to provide the technology platform for the fund manager to place their votes. These proxy managers (the big two are Glass Lewis and ISS) give a recommendation to the fund manager about how they should vote.
When there are votes, the Board of a company will also make a recommendation to shareholders about how to vote. It is well documented that on controversial issues, Glass Lewis and ISS have had opposite positions.
At Moneyworks, we look for fund managers that don't just accept their proxy advisers recommendation by rote, but where they do their own research and make their own decisions. Sometimes, where there is a very small shareholding and the impact of the vote is not significant the fund manager may choose to not to a lot of indepth research.
The reason that we like the Booster Stewardship report is that they list every time in the 12 months that they have voted against the Board recommendations, when it was, what the resolution was and why they voted that way. They also tell the reader what the outcome of the vote was.
This reporting shows in details the approach that Booster has towards the issues and the depth of research that they are doing. Here are some examples from this years report: [You can download the report from the button below]
April 2024 - Canadian Natl Railway Co.
Shareholder Proposal - Asks the Board of Directors to negotiate paid sick leave policies with all unions representing Canadian National Railways US workforce.
Board recommendations - Against
Booster vote - For
Rationale - Canadian National's Canadian employees get up to 10 days of paid sick leave a year. It's US based workforce is only entitled to sickness benefits after seven days of illness. The railroad industry's adoption of 'precision scheduled railroading' has reduced railroad carrier staffing levels by 30% since 2015 adding to staffing pressure.
Outcome - shareholder proposal lost - only 10% voted for the proposal.
May 2024 - CME Group Inc
Resolution - Election of five directors.
Board recommendations - For
Booster vote - Against
Rationale - While the board has a great mix of experience and talent, it's too large, so we have voted agains the five longest serving directors, who have all been on the board for over 20 years. This includes the CEO - who also holds the Chairman role -which we don't believe is best practice.
Outcome - Between 8% and 17% against the election of the Directors. Election of Directors passed.
September 2024 - Nike Inc
Resolution - To consider a shareholder proposal regarding a supply chain management report, if properly presented at the meeting.
Board recommendations - Against
Booster vote - For
Rationale - This proposal asks for more disclosure and the consideration of improvements in Nike's monitoring of it's supply chain. This proposal points to a controversy regarding unpaid wages to labourers in Cambodia which the company has failed to comment on in their response.
Outcome - the resolution failed - 13% voted for.
