Barbara Shecter May 17, 2011
Two of Canada’s major pensions scored a victory after taking the rare step of using a company’s annual meeting to try to force the firm to allow directors on the board only if they receive a majority endorsement from shareholders.
According to a regulatory filing Tuesday, a shareholder resolution for “majority voting” submitted by the Canada Pension Plan Investment Board and the B.C. Investment Management Corp. was passed at the annual meeting of European Goldfields Ltd., a Toronto Stock Exchange-listed mining company with mining operations in Greece and Romania.
The policy written by the pensions, and endorsed by shareholders, said that if the number of votes withheld for any director exceeds the number of votes cast for that director, the director “shall tender a resignation.”
In the absence of a majority voting policy, only “for” votes are counted and withheld votes have no effect, making it difficult for shareholders to dislodge directors. Institutional shareholders are pushing for changes to improve corporate governance, and even regulators are looking into whether they should impose or endorse policies such as majority voting under the banner of shareholder democracy.
It is now up to European Goldfields, which is based in Whitehorse, Yukon, to determine whether to adopt the policy on majority voting that has been endorsed by its shareholders.
Stephen Griggs, executive director of the Canadian Coalition for Good Governance — which speaks on behalf of large institutional investors including CCPIB and B.C. Investment Management — said Tuesday that European Goldfields has indicated by e-mail it will adopt majority voting.
Mr. Griggs called it “an important moment in the governance of Canadian public companies.”
Negotiations with a company are usually sufficient to establish practices sought by large shareholders, but that was not the case this time, Doug Pearce, chief executive of B.C. Investment Management Corp., told FP Street before the annual meeting. B.C. Investment Management invests money on behalf of public-sector employees in British Columbia, and has about $86-billion in assets under administration.
The European Goldfields annual meeting of shareholders took place May 13 in a suburb of Athens, Greece.