This one-day event, hosted by Kessler Topaz Meltzer & Check, LLP and Institutional Investor featured a stimulating day of panels, case studies, and workshops and featured a closing keynote address by the former President of the United States, Bill Clinton. Executives, legal counsel, investment officers, asset managers, and compliance and governance officers, representing institutional investors of various sizes, gathered together to discuss some of the most pressing issues affecting institutional investors, including shareholder engagement, navigating rules and regulations, integrating ESG into the investment process, and developments in the realm of shareholder litigation.
The conference began with a panel discussion entitled “Defining & Quantifying the Impact of Active Engagement.” Moderator Martine Menko, Investment Officer at Pensioenfonds Vervoer and panelists Anna Hyrske, Head of Responsible Investments at Ilmarinen, Alex van der Veden, Partner and Chief Investment Officer at Ownership Capital, Matt Christensen, Head of Responsible Investment at AXA Investment Managers Ltd., and Keith L. Johnson, Chairman of Institutional Investor Services Group and attorney at Reinhart Boerner Van Deuren s.c. discussed the impact of engagement and highlighted the need for institutional investors to engage with each other in order to effect the most change in corporations. The panel also highlighted the need to tailor engagement strategies to the country and culture where a particular corporation is located and to make sure that institutional investor’s voting and engagement strategies are in line.
Following the panel, Rogier Snijdewind, Advisor for Responsible Investment at PGGM Investments, conducted a case study on the “Intricacies of the Shareholder-Independent Board Member Relationship.” Mr. Snijdewind discussed the lack of shareholder rights within some countries and companies and provided the example of Germany where shareholders do not have a say on pay and lack the ability to vote on CEOs. As an example, Mr. Snijdewind highlighted PGGM’s action last spring in publicly contesting the position of the Chairman of the Board and a newly appointed CEO at German-based GSW after the non-executive supervisory board decided to appoint the CEO without consulting shareholders.
Andy Zivitz, a partner at Kessler Topaz Meltzer & Check, followed Mr. Snijdewind’s case study presentation with a rousing case study of the “London Whale,” the activities of a trader in JP Morgan Chase & Co.’s Chief Investment Office, which ultimately led to more than $6 billion in losses for JP Morgan. Mr. Zivitz’s presentation highlighted the details of the risky trading activities, the aftermath of the crisis, and provided an update on the current securities class action pending before the Southern District of New York in the United States. Mr. Zivitz’s presentation incorporated both analysis and video clips from various news sources and the movie The Inside Job.
After the morning panel and case studies, delegates separated and attended one of three workshops. Delegates were able to attend a workshop on either:
- “Influencing Responsible Investment Outcomes Through Firm-Wide Integration” — This workshop, led by Harald Walkate, Senior Vice-President and Head of Responsible Investment at AEGON Asset Management and Ebba Schmidt, Responsible Investment Manager for the UK Pension Protection Fund, focused on how funds might more generally impact investment outcomes by actions like identifying firm priorities and involving employees (not just specialists) in the responsible investment process.
- “Reconsidering the Tsunami of Regulation” — Workshop leaders Johan Sundin, Senior Legal Counsel for SEB Wealth Management and Uffe Berg, Corporate Lawyer at Industriens Pensionforsikring led a discussion on over regulation of the financial sector and the disconnect between real problem and the regulatory response. The workshop participants also discussed possible solutions for making the legislative process more focused and democratic in order to strengthen the regulatory impact.
- “EU Bonus Caps and the State of Executive Pay Practices” — Workshop leaders Anatoli van der Krans, Senior Advisor Responsible Investment & Governance at MN and Pila Pilv, partner at New Bridge Street, an Aon Hewitt Group, discussed the potential future impact of recent actions regarding executive pay practices including: actions within the EU including a bonus cap provision in CRD4, a proposed 20% pay curb in the Netherlands, and the Swiss referendum rejecting a proposed limit to executive pay.
After lunch, Stuart Berman, a partner at Kessler Topaz Meltzer & Check, LLP, and panelists Richard Gröttheim, Chief Executive Officer at AP7, Paul Edmonds, Senior Vice President of Corporate Affairs and General Counsel of the Ontario Pension Board, Keith Johnson, chairman of Institutional Investor Services Group Chairman and attorney at Reinhart Boerner Van Deuren s.c., and Anders Månsson, partner at Setterwalls, debated the impact of recent U.S. Supreme Court decisions on shareholder litigation. In “Are Courtroom Doors Closing to U.S. Investors? Erosions in Shareholder Rights and What Investors Can Do to Reverse the Trend,” the panelists discussed how cases like Morrison v. National Australia Bank (which limited the ability to pursue a remedy in the U.S. to only those shareholders who purchased shares on a U.S. market) now requires funds to spend a large amount of time and resources in researching potential actions in non-U.S. jurisdictions.
Following the panel, three different case studies were presented. The first, “Integrating ESG Principles into the Governance Process: Examples in Private Equity” presented by Ludo Bammens, Director of European Corporate Affairs at KKR and Jan Erik Saugestad, Chief Investment Officer at Storebrand Asset Management, examined how ESG/SRI principles can be integrated into the governance process and how private equity can serve as a model for the larger investment universe. The second, “The Future for Institutional Investors and Responsible Investing” presented by Sasja Beslik, Head of Responsible Investment and Governance at Nordea Investment Funds, looked at the UN development goals for 2015 and explored what institutional investors and companies can do to strengthen governance models and responsible investment strategies in order to further those goals. The final case study, “The Next Generation in Board Diversity” presented by Matt Christense, Head of Responsible Investment at AXA Investment Managers Ltd., looked at research that demonstrates a link between greater board diversity and positive financial performance.
Former President Bill Clinton closed out the event with a keynote address on the greatest challenges in the world today. Clinton spoke of increasing global interdependence and the threat of inequality. Clinton discussed how more cooperation is needed to work to address problems. Clinton outlined some of the ways that institutional investors could play a role including looking to define performance not just by stock price but with consideration of a company’s attention to corporate social responsibility. He also suggested that institutional investors look to invest in things like green energy in the Caribbean island nations because the investment would be profitable, lower energy costs for residents of those companies, and make the energy production more environmentally sustainable.
Following Clinton’s keynote address, Kessler Topaz Meltzer & Check partner Darren Check joined Clinton on stage and engaged Clinton in a question and answer session in which Clinton discussed other important global issues including the impending crisis in the Ukraine.
According to the conference delegates, the Ninth Annual Rights and Responsibilities of Institutional Investors conference was a resounding success. We are looking forward to March 2015 when we will host another exciting day of discussion and debate on the issues affecting shareholders. We are currently in the process of planning next year’s
conference, which will once again be held in Amsterdam, The Netherlands.