Views on improving the integrity of global capital markets
04 March 2016

CorpGov Roundup: Are Vanguard, Buffett, Dimon, BlackRock Sowing Seeds for US Code?

Australia waves goodbye to “show of hands” voting. Crowdsourced governance ratings now happening in Hong Kong. What will Vanguard’s move mean for proxy voting results? Are seeds of a US corporate governance code being sown? These and more were spanning the corpgov world in February.


The practice of “show of hands” voting at annual general meetings instead of the one-share-one-vote poll method was recently dealt a blow in Australia.

According to a 9 February media release by the Australian Council of Superannuation Investors, two-thirds of companies targeted by a global collaborative investor initiative have moved towards using polls. The investor initiative called for companies to adopt poll voting instead of the one-share-one-vote principle.

The initiative contacted 38 of Australia’s largest companies who used “show of hands” during the 2014 voting season. Since then, almost two-thirds have improved practices in their 2015 shareholder meetings, compared to 2014, with most moving to poll voting for all resolutions. This result demonstrates the power of global investor collaboration on corporate governance issues, and the willingness of progressive companies to respond quickly.


The issue of dual-class shares has surfaced again in Canada. Ailing Canadian firm Bombardier is seeking a financial lifeline from the Canadian government. However, there is talk that the government may be asking the company to jettison its dual-class share structure to secure government aid. The company’s dual-class share structure currently gives the Bombardier-Beaudoin family a controlling voting stake in the company that is not commensurate with its ownership stake.

CFA Institute supports the standard of “one-share-one-vote.”

Hong Kong

Hong Kong governance leading light David Webb has launched a novel concept — crowdsourced governance ratings, which he hosts on his Webb-site. According to the plan, users can anonymously contribute to the average rating of an organization, including listed companies, governments, and others. Users can also rate their trust in company directors, politicians, financial advisers, or others.

According to a Webb-site Reports article, “… we’ve been freely expressing our views on the quality of corporate and economic governance in Hong Kong and elsewhere. Now, it’s your turn. Any user who is logged in to his or her Webb-site account can now, with our one-click ratings system, anonymously contribute a rating on the governance quality of any organisation, including listed companies, on a scale of 0 to 5, where 0 is of course the lowest. We will publish the average rating for each organisation, but no individual contributions will be identified.”


The International Finance Corporation (IFC) and the Bombay Stock Exchange (BSE) have developed a corporate governance scorecard to gauge the level of corporate governance at Indian public companies.

Using the scorecard, companies can identify areas of further improvement and track progress over time. The IFC and the BSE hope that the scorecard can be used as a tool to make board processes more efficient, improve strategy, aid decision making, and manage risks. Companies can better understand governance and how it affects their operations. Ultimately, the scorecard is about improving governance at all Indian companies.


Japan’s Government Pension Investment Fund published a report at the end of January on how it is complying with the country’s new stewardship code. The report reviews interviews with the fund’s external asset managers, including:

  1. Bipolarization of stewardship activities at external asset managers
  2. Comparison between active and passive management
  3. Issues concerning governance and external asset managers

The report discusses conflicts of interest among external asset managers of financial institution groups and the still-prevalent trend of large cross-shareholders between Japanese companies.

The report sheds light on engagement activities in Japan — an important development at such an influential fund — and could spur similar disclosures by other large Japanese funds. Such enhanced disclosures would be welcomed by investors.


The Netherlands proposed a new draft of the Dutch Corporate Governance Code in February. The code deals with such issues as the board structure of Dutch companies, remuneration, conflicts of interest, board independence, and board committees.

Those wishing to comment should do so by 16 April.


Early in February, financial luminaries such as Jamie Dimon, Warren Buffett, and the heads of BlackRock, Fidelity, Vanguard, and others announced that they have held meetings in previous months to work on improving the corporate governance of public companies.

The group said they are working on a statement of best practices to improve the relationship between US companies and their shareholders. Discussions have focused on issues such as the role of the board, executive compensation, board tenure, shareowner rights, and battling short-termism in US markets.

Some in the investor community may wonder if the seeds of a US corporate governance code can come from such meetings. The US is one of the few markets around the world without a national corporate governance code, and such attempts to develop a code have stumbled due to factors, including the nature of governance in the US, which is dominated by the governance standards of the states where companies are domiciled (most in Delaware). The thinking is that if a set of governance best standards comes from such a group of high-profile issuers and investors, it will be easy for other issuers and investors to sign on.

Proxy access update: It is big news when fund giant Vanguard does anything, but its latest move could affect proxy voting results this spring.

The fund company changed its proxy voting guidelines recently to support US proxy access proposals with a 3% ownership threshold. Vanguard originally supported a 5% threshold when the issue first came to a head in late 2014, and has since moved to evaluating proposals on a case-by-case basis. (CFA Institute published a 2014 report that bolstered the case for proxy access.)

It remains to be seen how this change in policy will affect the voting results on proxy access this year. Stay tuned.

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Image Credit: YinYang

About the Author(s)
Matt Orsagh, CFA, CIPM

Matt Orsagh, CFA, CIPM, is a senior director of capital markets policy at CFA Institute, where he focuses on corporate governance, ESG, and climate change analysis. He writes and speaks frequently on these topics on behalf of CFA Institute. His paper, Climate Change Analysis in the Investment Process was named “Best ESG Paper” by Savvy Investor in 2021.

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