“An asset owner view on shareholder engagement from KPMG” highlights some of the key takeaways from a recently recorded interview with Executive Director of Corporate Governance at the New York City Office of the Comptroller, Yumi Narita. Among other noteworthy insights, Yumi indicates that the reason the pension funds file shareholder proposals as a first step in their engagement process (which companies generally perceive as an escalation activity on the engagement spectrum) is due to time constraints:
We generally go to the board of our five pension funds to ask them for approval on initiatives coming up during the next proxy season; they will select the ones they like and then we file shareholder proposals as a first engagement step. The reason for this is around timing. If an Annual General Meeting is in May and filing for the proxy is in the fall of the prior year, we don’t have time to send a letter and wait for a response.
Not surprisingly based on the record, the interview affirms NYC’s support in using shareholder proposals to effect changes in corporate practices and its willingness to withdraw proposals upon reaching acceptable agreements with the targeted companies.
This post first appeared in the weekly Society Alert!