Case Summary
Who
Alice Blackmore, Managing Director International Equities, British Columbia Municipal Employees Pension Fund (BCME). BCME is a major Canadian active pension fund.
Issue
Alice had to decide how the pension fund would vote on July 19, 2007 regarding the say on pay with respect executive compensation.
Vote for say on pay is common is United Kingdom. To date, BCME had always agreed with management. US and Canada did not have vote for say on pay.
Institutional Shareholder Services (US based firm that provides objective advice for proxy voting and risk analysis) and the Australian Shareholder’s Association (Australian non-profit organization to protect and advance the interests of shareholders) has strongly recommended a vote against the package.
When
June 22, 2007
Background
BCME
BCME is a municipal pension fund with $75B in assets under management with equity investments globally. (US, Canada, United Kingdom)
The fund has a passive investment philosophy.
Until 1986, (80% bonds/fixed income, 20% blue chip Canadian and large capitalization US equities.
In 2007 the asset allocation mix changed. Lower weight was given to bonds/fixed income, reflecting the need to earn higher returns to keep pace the rising pension obligation: 10% fixed income, 40% blue chip Canadian and large capitalization US equities, 25% international equity, 15% as partners in Public Private Partnership projects, 5% index funds, and 5% venture capital.
Alice’s mandate when she was appointed in 2002, was to grow the international equity portfolio aggressively but within the risk tolerance set by the Investment Committee.
From 2002 to 2007 Alice grew the fund from 15% of the overall portfolio to current level of 25% ($18.75B).
Alice’s investment philosophy is focused on investing in relatively few industries, companies with known reputation for excellence, and avoidance of Japan, Korea and Thailand. Her fund has small investments in...