Two of Canada's largest institutional investors have taken the rare step of filing a shareholder proxy resolution to try to persuade a small mining company to adopt a majority voting policy.
British Columbia Investment Management Corp. and the Canada Pension Plan Investment Board submitted a resolution to European Goldfields Ltd. asking shareholders to support their call for the company to adopt a policy requiring directors to tender their resignations if they do not get majority support in annual board elections.
BCIMC chief executive officer Doug Pearce said the pension funds, both active members of the Canadian Coalition for Good Governance, initially identified 12 companies they wanted to urge to adopt a majority voting policy. Nine of the 12 voluntarily agreed to implement majority voting after negotiations with shareholders, and two others agreed to the policy when the pension funds notified them that they would be submitting proxy resolutions.
"They said, 'We're onside, we're going to do it,' and European Goldfields said it was up to the shareholders - 'If the shareholders want it we'll do it,'" Mr. Pearce said.
The Whitehorse-based company has made no recommendation to shareholders on how to vote on the proposal, which will be considered at its annual meeting in Greece on May 13. European Goldfields has gold reserves and operations in Turkey, Greece and Romania.
Majority voting policies have been adopted by more than 130 of Canada's largest public companies because existing voting rules only allow shareholders to vote "for" a proposed director nominee or "withhold" their vote, but do not allow votes against directors. That means directors can be elected with only a small amount of support from shareholders, because withheld votes are not counted.
The policies require directors to resign if more "withhold" votes are cast than "for" votes.
The proxy resolution submitted to European Goldfields argues that majority voting strengthens director accountability and gives shareholders more rights.
"One of the principal rights of voting shareholders is to elect who oversees their company," the pension funds argue. "Each individual director should be accountable to shareholders and have their confidence and support."
Mr. Pearce said the BCIMC has not filed proxy resolutions in the past and doesn't anticipate continuing a campaign in the future. However, he said the fund is "not scared of doing them" when important issues arise.