US pension fund giants take aim at former RBA governor Glenn Stevens

Having overseen some of most turbulent times of Australia’s economy, Glenn Stevens has found himself in the crosshairs of America’s two biggest pension funds.

America’s two biggest pension funds have voted against the re-election of Glenn Stevens to Macquarie’s board. Picture: NCA NewsWire/Joel Carrett

America’s two biggest pension funds are circling against former Reserve Bank of Australia governor Glenn Stevens, agitating for his removal as a director of the millionaire’s factory, Macquarie Group.

The California Public Employees’ Retirement System and California State Teachers’ Retirement System – which combined manage $US753bn ($1.02 trillion) worth of assets – have signalled their intention to vote against the re-election of Mr Stevens to Macquarie’s board at the group’s upcoming annual meeting.

Mr Stevens – who led the Reserve Bank for 10 years until 2016, overseeing some of the economy’s most turbulent years from the mining boom to the fallout from the global financial crisis – is the only Macquarie director that the two pension funds want shown the door.

It is a surprise move given Mr Stevens is widely respected with deep economic experience and clout, and casts a brighter spotlight on those who make the transition from high public office to corporate boardrooms.

The opposition to Mr Stevens’ election also displays the growing might around pension and superannuation funds seeking to influence companies at the top.

In this case, it appears that Mr Stevens and Macquarie have been caught in a protest vote around the absence of a resolution at the group’s annual meeting on the appointment of its auditor. In the US such resolutions are common but rare in Australia, and given Mr Stevens is a member of Macquarie’s audit committee a vote against his re-election is a bid to inject some American protocols into Australian boardrooms.

After all, Mr Stevens’s re-election is also the only resolution that California Public Employees‘ Retirement System (CalPERS) and California State Teachers’ Retirement System (CalSTRS) have voted against, with the two funds supporting Macquarie’s remuneration report and chief executive Shemara Wikramanayake’s retained profit share, which totalled $15.9m last financial year.

It comes after Mr Stevens was touted a successor to Macquarie chairman Peter Warne, who last year flagged his retirement when his term expires at the end of this month. But Mr Warne has scrapped those plans and is standing for re-election, and CalPERS and CalSTRS have both supported the move.

The California Public Employees’ Retirement System and California State Teachers’ Retirement System have signalled their intention to vote against the re-election of Mr Stevens to Macquarie’s board at the group’s upcoming annual meeting. Picture: Bloomberg

Mr Stevens, 63, joined Macquarie’s board in 2017 – a year after stepping down as RBA governor – and is chairman of the group’s risk committee as well as a member of the board’s audit committee.

His transition from public to corporate office was not unusual, with his RBA predecessor Ian Macfarlane serving as director of Woolworths, Leighton Holdings and ANZ.

It’s not the first time CalSTRS has stirred up a proxy vote battle and while it has a relatively minor shareholding in Macquarie at 0.14 per cent, it, along with CalPERS – which owns 0.2 per cent – carries significant influence among other investors – think AustralianSuper in the local market.

Earlier this year CalSTRS help successfully advocated boardroom change at multinational energy behemoth ExxonMobil after it reported a loss of $US22bn in 2020, a result the fund branded the “continued erosion of shareholder value”.

CalSTRS supported a move by little known activist investment fund, Engine No. 1, which despite owning 0.2 per cent of ExxonMobil was able to install three new directors on the company’s board in effort to force the energy giant to confront climate change.

“Incremental changes are not enough to restore investor confidence and position the company for the global energy transition,” CalSTRS said in a statement in February.

“Piecemeal investments in carbon capture do not demonstrate a long-term energy transition strategy. ExxonMobil’s plan to invest $US3bn over five years on carbon capture and lower-emission energy technologies is inadequate, as it represents a small percentage of ExxonMobil’s annual capital expenditures.

“We are concerned that this minor investment is not part of a bigger and more significant long-term strategy to remain competitive in a rapidly changing world.”

Following the release of the preliminary voting results at ExxonMobil’s annual meeting in June, in which shareholders elected a third director nominated by Engine No. 1 and supported by CalSTRS, the fund said it would “strengthen ExxonMobil for the future”.

“Shareholders have the power to effect change at even the most resistant companies and contribute to the sustainable value of their investments,” CalSTRS said.

“We will continue to actively engage companies in our portfolio to prepare for the global transition while maximising returns for California’s educators.”