Wednesday 21 November 2018

Voting different ways on the same stock

There's always a danger that a) if pension funds delegate voting rights to asset managers and b) if they appoint multiple asset managers then they may end up voting different ways on the same stock.

Googling around for something completely different the other day, I came across a current example. The fund in question actually has managers that in some cases hold the same stock and, on some pretty significant votes at significant companies they voted different ways. This is flagged up by the fund's investment consultant (I've anonymised the managers):

On Amazon and Tesla, MANAGER A does not believe a separation of CEO and Chair positions would bring governance improvements and did not vote in favor of the resolution. The manager aligned itself with Facebook management on not adopting a responsible taxation code and not requiring reporting of “fake news” or reporting on the gender pay gap. MANAGER A did not disclose its position on the dual-share class issue.

On Amazon and Tesla, MANAGER B took the opposite position to MANAGER A and does believe separating CEO and Chair positions will bring governance improvements and voted against the management. The manager aligned itself with Facebook management on not adopting responsible taxation code but was in favour of reporting on “fake news”, the gender pay gap and abolition of dual-share classes.

Actually the fund has a third manager that also holds one of the same stocks as the other two:


MANAGER C voted against Facebook’s management on the reporting on “fake news”, the gender pay gap and abolition of dual-share classes but did not disclose votes on adopting a responsible taxation code. 

Needless to say, Amazon, Tesla and Facebook are companies that have some controversial practices. But the fund's appointed managers have voted different ways on some key issues.

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