MOSERS removes proxy voting
The Board of Trustees of the Missouri State Employees’ Retirement System (MOSERS) voted this week to remove proxy voting from investment managers, a move Treasurer Scott Fitzpatrick said would protect shareholders’ interests.
Proxy voting allows company shareholders to express their views on issues related to public companies and to vote in board elections. That power was granted to asset management firms that hold shares in companies on behalf of MOSERS, according to the Treasurer’s Office. These companies were expected to use their votes to maximize value for the pension system.
The board voted Thursday to strip wealth managers of that power and committed to drafting a new voting rights policy that will require full board approval going forward.
Fitzpatrick, who serves on MOSERS’ Board of Trustees and Investment and Audit Committees, referred to BlackRock Inc., a multinational investment firm that holds a majority of MOSERS’ US equity exposure. The company, which is also a major shareholder in Exxon Mobile, recently used its proxy votes to endorse three climate activists for a seat on Exxon’s board, according to Reuters reports.
Fitzpatrick, a Republican, said these new members would likely work to have Exxon scale back its oil and gas production, noting the potential financial impact on the gas giant and the public as average gas prices in Missouri climb to over $4. $50 per gallon rise. He said he views actions like this, coupled with actions focused on climate change and clean energy policies, as economically damaging policies that run counter to the interests of MOSERS shareholders, rather than efforts to increase the value of the fund to increase.
“They put pressure on the banks not to lend money for energy projects that involve fossil fuels; that drives up energy costs and is not in the best interests of the shareholders represented,” Fitzpatrick said in an interview with the News Tribune. “It matters that they exercise their voice on behalf of MOSERS and on behalf of other pension plans in Missouri and across the country, and on behalf of retail investors in a way that the majority of the money they manage probably are not agree. I see this as a breach of their fiduciary duty to put financial interests and their customers first and not use other people’s money to answer the political agenda.
Fitzpatrick said he raised the issue Thursday during a board meeting, after which members debated whether to abstain while an official voting policy was established, or allow those companies to continue voting on their behalf. Ultimately, members expressed their support for the former.
“Companies have shown that they put other things ahead of these financial interests. And I don’t think we can let that happen,” Fitzpatrick said. “We need to develop a proxy voting policy. And the reality of the situation is that you obviously want to vote on all of these issues. But in my opinion it would be better if our shareholders abstained on some of these issues than our votes can be used and voted and voted against the interests of the people under the plan.
The board will start work on the new policy immediately, he said.
A BlackRock spokesman did not immediately respond to a request for comment.
The board consists of legislators, finance professionals, governor’s officers and the commissioner of the administrative office, and the state treasurer.
MOSERS takes care of old-age provision, occupational disability insurance and life insurance for state employees.
According to the latest annual report, MOSERS had almost 46,000 active members and 67,808 inactive members in 2020.
The state is also Jefferson City’s largest employer, with approximately 14,000 state employees making their home in the area, according to the Jefferson City Chamber of Commerce.