The British Columbia Investment Management Corp. is once again voting against nine proposals supported by the board of China Gas Holdings Ltd., including the re-election of five corporate directors.
During its recent annual general meeting, the Hong Kong-based energy company’s management team had requested that investors vote in favour of the re-election of board members Huang Yong, Li Ching, Liu Mingxing, Mahesh Iyer and Zhao Yuhua. In all cases, the BCI voted against the proposed hires. Despite the BCI’s persistence in voting against the wishes of the CGH board, all the measures the pension investor has opposed have been met with the overall support of shareholders.
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This isn’t the first time the BCI has voted against the wishes of CGH’s board on the matter of its executive choices. During the 2015, 2018, 2019 and 2020 annual general meetings, it voted against the election or re-election of all corporate officers proposed by the board.
Its continued opposition relates to the presence of non-independent executives on the CGH board. A non-independent director is one who’s associated with the body over which it governs, though the term typically excludes chief executive officers.
This year, the BCI’s opposition is related to concerns that Iyer, Ching, Mingxing and Yong served the board as non-independent directors. “We do not support insiders on the board other than the [chief executive officer and the executive chair],” said the BCI in its proxy voting record report. “We are not supportive of non-independent directors sitting on key board committees.”
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The BCI also withheld its support for Yuhua on the basis that he had served on the nomination committee and failed to ensure the independence of the board. A proposal to authorize a repurchase of share capital was among the other proposals rejected by the BCI’s representatives. It said the proposed repurchase “did not have sufficient limits to protect existing shareholders.”
Until 2002, Chinese law didn’t require any board members to be independent of the day-to-day operations of a business. Since 2003, just one in three board members have been required to be independent. In Canada, the Canada Business Corporations Act mandates that the majority of board directors must be independent, though exemptions can be made in certain circumstances.
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CGH isn’t the only company to have faced the BCI’s votes of protest in response to the presence of non-independent executives on corporate boards. This year alone, the Canadian pension investment organization has voted against the election or re-election of numerous board members at numerous businesses, including the Bank of China and the Chinese Agricultural Bank.