Banks face array of shareholder proposals

Executive compensation, the environment and investor access are among the top shareholder concerns facing the big banks at their annual meetings this year.

All of the Big Six except Toronto-Dominion Bank issued proxy materials this week for their upcoming shareholder meetings.

Based on a review of shareholder proposals filed with each bank, a central concern continues to be the environment. For example, Québec’s Mouvement d’éducation et de défense des actionnaires (MÉDAC) has called for advisory votes on banks’ environmental policies, also known as “say on climate.”

At the same time, Royal Bank of Canada shareholders will be voting on a proposal from the Comptroller of the City of New York asking for a report on the bank’s clean-energy financing activities.

Shareholders for each bank also will be asked to vote on a proposal from an anti-ESG group, Toronto-based InvestNow, which asks the banks to report the impact of divestment from the Canadian oil and gas sector on shareholder value.

On the governance front, a couple of banks are facing shareholder proposals over the use of virtual meetings — a practice that was adopted in response to the pandemic, but which has caused governance advocates to worry shareholders will be disenfranchised.

The Canadian Securities Administrators recently issued revised guidance on the subject, but that hasn’t been enough to quell concerns.

In terms of executive compensation, Vancouver’s Vancity Investment Management wants certain banks to publicly disclose the ratio of CEO compensation to median employee pay on an annual basis.

MÉDAC is also continuing to ask certain banks to disclose their compensation ratios by country, and their exposure to tax havens.

The banks are unanimously recommending that shareholders reject all the proposals that will go to a vote at this year’s shareholder meetings.

The banks’ proxies also set out the proposals that were withdrawn following successful engagement between the banks and the groups that submitted them.

Scotiabank has been one of the most successful at this, with just three proposals going to a vote at the upcoming annual meeting. Another seven proposals were withdrawn — including six by MÉDAC on various issues, and one from Vancity seeking disclosures about the bank’s clients’ energy transition plans.

“This year, we received proposals from a number of shareholders and held several discussions with each of them to understand their points of view and to share how we are addressing the issues they raised. For the most part, our discussions with these shareholders resulted in an agreement to withdraw the proposals,” Scotiabank said in its proxy materials.