Questions for your Manager - April 2016

The Pensions and Lifetime Savings Association publishes monthly topical questions to aid trustees in considering the effectiveness of their managers’ stewardship activity. We encourage funds to ask these questions during their regular manager reviews in an effort to understand their managers’ approaches and activities and to ensure that they are adhering to the stewardship policies.

APRIL'S TOPICAL QUESTIONS FOR YOUR MANAGER

Background: World leaders agreed in Paris last December to keep global warming well below 2 degrees Celsius in order to prevent dangerous climate change. Tightening public policy may have major repercussions for the oil and gas majors in which most pension funds are invested. Last year shareholder resolutions were passed at the BP and Shell AGMs, with board support, committing the companies to disclose to investors their resilience in the long-term to a 2 degrees scenario. However, in the US, Chevron and ExxonMobil have resisted the filing of similar resolutions by investors, including Hermes and the Church Commissioners, until forced by a Securities and Exchange Commission ruling to put the resolutions (resolutions number 7 and number 12 respectively) to a vote. Investors can declare their support for the resolutions here.

Question: Will you support, or, if you delegate voting, encourage your fund managers to support, the resolutions at the Chevron and ExxonMobil AGMs which ask the companies to disclose annually to investors their resilience in the long-term to a 2 degrees scenario?

Background: Last year BP recorded losses of $6.5 billion and took the decision to axe 7,000 jobs. Despite, this the company intended to award Bob Dudley a £14 million pay package, including the maximum possible bonus pay-out, on the basis of its operational performance. However, 60 per cent of shareholders voting at the company AGM voted against the remuneration report, prompting questions over the future of the Remuneration Committee Chair, Professor Dame Ann Dowling.

Question: Did you support or oppose the BP remuneration report, and do you think Dame Ann Dowling’s position as remuneration Committee Chair is still tenable? What approach do you apply more generally to eight-figure pay packages, and generous pay awards to CEOs of companies that are cutting jobs across their wider workforce?

Read previous questions here.