Investment manager Neuberger Berman will disclose ahead of time how it will vote its proxies for 60 or so companies before they hold their annual meetings.
The move marks the second year that Neuberger is preannouncing its votes, both for and against corporate management, and explaining its voting rationale. The disclosures are part of the firm’s effort to be a more effective investor and enhance returns by pushing companies to tackle environmental, social, and corporate governance, or ESG, risks. The initiative, called NBVotes, addresses key themes like diversity, human capital management, capital allocation, pay equity, racial equality, political contributions, and climate change.
Neuberger’s actions are highly unusual: Most firms disclose votes long after the election, if at all.
This year, for example, Neuberger plans to vote against the management of Berkshire Hathaway (ticker: BRK.A) at its annual meeting. Berkshire faces shareholder calls for it to publish an annual assessment of how the company manages climate risks and handles diversity and inclusion efforts. Berkshire recommends rejecting both proposals, saying that its subsidiaries “are already making sound climate-related decisions” and that its decentralized businesses are “individually responsible” for their own diversity initiatives. Neuberger disagrees.
The firm is doubling the number of companies for which it’s disclosing votes ahead of time, Jonathan Bailey, head of ESG investing at Neuberger, told Barron’s in an interview. “It’s important particularly as an active manager with meaningful positions in smaller companies that we partner with management for longer-term returns,” Bailey said.
The other big change from last year: The pandemic’s influence on Neuberger’s thinking on such issues as management compensation plans. “What actions did boards take last year [during the pandemic] and was it appropriate? The same type of votes now come with that important lens that wasn’t there a year ago,” Bailey says.
For example, Neuberger is looking at whether management received significant bonuses at a time when large layoffs of the workforce occurred. The firm is also looking for more transparency about the composition of the workforce.
Bailey believes more investors may begin disclosing their voting information as the European Union pushes its shareholder rights directive to bolster shareholder engagement, which calls for increased public disclosures by institutional investors.
Among other companies for which Neuberger is pre-announcing votes: HCA Healthcare (HCA), which is holding its annual meeting on April 28. Neuberger plans to reject a shareholder proposal that HCA report on the feasibility of increasing the impact of the company’s performance on quality metrics on executive compensation. Neuberger says it is pleased with the company’s compensation program and the patient metrics it includes.
On the other hand, Neuberger will vote in favor of a shareholder proposal on the right to call a special meeting at Kellogg (K). The Kellogg board has made no recommendation on this proposal.
Write to Leslie P. Norton at [email protected]