In a survey released Tuesday, 67% of investment management firms who participated said they have complete discretion over most of the proxy votes of their pension clients. This is slightly less than last year’s survey result of 73%. While this means that more pension plans are providing voting guidelines to their proxy voting agents, more than two- thirds of the participating firms are not receiving any instructions.

The Key Proxy Vote Survey is conducted by the Shareholders Association for Research and Education (SHARE) and is a voluntary national survey in its seventh year. This year 31 firms that collectively manage a total of $553.7 billion in pension assets (of which $64.4 billion is invested in Canadian equities) responded. The survey polled the companies on how they voted on key issues that appeared on the proxy ballots of Canadian corporations during the 2007 proxy season as well as how the firms manage their proxy voting responsibility.

The reason that pension trustees appear to be a bit more active has to do with ever increasing transparency as to how proxies are voted, says Laura O’Neill, director of law and policy with SHARE. “Mutual funds companies in Canada are now required to report to their unitholders on the voting decisions of their funds each year. Some pension funds make voluntary disclosures. Often these reports are made public, and that garners increased attention to governance issues and to how specific ballots are cast.”

The survey shows slight increases over last year’s results in a variety of areas related to transparency and responsiveness to pension clients’ needs. “None of these gains were large,” wrote the authors of the survey report, “but they suggest gradual improvements in the way voting agents handle proxy voting for their pension clients.”

The number of firms that issue proxy-voting reports to their clients has increased to 100% from 97% of the firms that participated in the survey. There have also been increases in the number of firms that allow their clients to determine the frequency of those reports—to 36% from 29%—and that customize their reports for their clients—to 36% from 26%. The numbers of firms that have their own proxy-voting guidelines and that consult with their clients in the development of those guidelines have also increased but only by 2% and 3%, respectively.

On another positive note, more firms than last year have proxy-voting guidelines, review their guidelines annually and consult with their clients when developing guidelines. However, the survey saw no increase in the percentage of participating firms—29%—that disclose their proxy votes to the public. The authors call for more disclosure of votes to increase transparency in the process.

SHARE “applauds those pension trustees who are actively overseeing their proxy voting, and encourages the trustees who are not [doing so] to follow their lead,” wrote the authors. “Trustees have a duty, as fiduciaries, to oversee the voting of proxies attached to their plans’ equity investments.”

SHARE has suggestions for how trustees can efficiently maximize their involvement in the proxy-voting process. “They can, for example, review the proxy voting practices of an investment manager before engaging that manager’s services, and at least annually thereafter,” says O’Neill. “Reviewing the manager’s proxy voting guidelines and finding out about the expertise of the staff involved in proxy voting are good starting points. It is also crucial that trustees ask questions about anything that isn’t clear to them.

For a copy of the 2007 report, click here.

To read last year’s story about this survey, click here.

To comment on this story, email leigh.doyle@gmail.com.