Voting recommendations
Note to journalists:
Note: the lack of numbering on the individual election resolutions adds to the confusion that voters may feel. Reasons AGAINSTItem 2.aResolution 2.a would only be appropriate if every shareholder was happy with the list of directors proposed for re-election. As we oppose one of the candidates, we will vote against resolution 2.a, and hence it will not be passed unanimously, and hence resolution 2.b will apply. Frankly, the inclusion of 2.a is a waste of time since on a poll there will almost certainly be some votes against it, so it is almost certain never to pass.Item 2.bWe are in favour of all candidates except Raymond Or Ching Fai. Mr Or is proposed for re-election as an independent non-executive director, but he has a conflict of interest because he is also General Manager of The Hongkong and Shanghai Banking Corporation Ltd (HSBC), which is a banker to CP. Swire Pacific Ltd (SP, 0019/0087), the 45.8% controlling shareholder of CP, lists HSBC as its only principal banker, and so does associate Hong Kong Aircraft Engineering Co Ltd (0044). Furthermore:
These cross-directorships between Swire and HSBC constitute a further conflict of interest for Mr Or, so we cannot regard him as independent. This is not a new position for bankers at the airline - he succeeded Chris Langley on 1-Feb-00, who in turn succeeded Paul Selway Swift on 29-Feb-96, both of whom were senior figures at HSBC before retirement. It seems that HSBC has traditionally had a seat on the board of CP, which would be fine if the company didn't claim that the occupant was independent. The same pattern is observed at Swire Pacific. Regular readers will know that we have opposed "independent" directorships at Hang Seng Bank, Hong Kong & China Gas and Bank of East Asia for the same reasons. We are not alone in this - the New York Stock Exchange has recently submitted proposals to the SEC which frowns upon a company's bankers from being considered as independent directors, and in the UK, the Higgs report on non-executive directors made a similar recommendation that the UK Combined Code on corporate governance be amended to make clear that those whose employers have "material business relationships" with a company should not be considered as independent of that company. Items 5 and 6Webb-site.com urges all investors to vote against the general issue mandate for all listed companies, for the reasons explained in Project Vampire, unless they comply with the recommendations set out in that article. The non-pre-emptive issue mandate allows management to choose the shareowners by allotment of shares. This corrupts the governance mechanism. Shareowners should govern management, not the other way around. If a company wishes to raise cash by issuing shares, then it should do so by rights issue. Copyright Webb-site.com, 2003 Sign up for our free newsletter Recommend Webb-site.com to a friend Important notice: All material on this site, except where otherwise accredited, is copyright to Webb-site.com. Media and researchers are welcome to quote from articles on this site, provided that such quotation is attributed to Webb-site.com. The information in this site should not be relied upon by any person in making any investment decision. No responsibility or liability is accepted by Webb-site.com or any person related to it for any loss arising from or in reliance upon the whole or any part of the contents of this site. Persons who are in any doubt about an investment or potential investment should take professional investment advice. From time to time parties associated with Webb-site.com may own long or short positions in securities issued by or related to companies or governments on which we comment. |