Chase Aims To Let Funds Vote in Japan
By offering a new service for big pension funds, Chase Manhattan Corp. will enable investors to shake up Japan's corporate honchos.
Chase Manhattan is apparently the first bank to enable trust customers holding shares in Japanese corporations to easily vote on resolutions at the companies' annual meetings.
A Threat to Status Quo
"Japanese companies might start paying attention to things they used to ignore," said James Economides, a manager in Chase's global custody business. "If you see your owners voting, you may have to take an interest."
Chase is the largest U.S. global custodian, with more than $110 billion in assets under custody.
A small number of the bank's U.S. pension fund customers voted this year, and the number is expected to grow significantly next year as pension funds move to comply with the latest position of the Labor Department on the fiduciary responsibility of voting proxy shares.
The department has indicated it wants pension funds to exercise their fiduciary responsibility by voting their shares at annual meetings. Some pension funds have interpreted the department's stance to include foreign-issued shares.
Japanese annual meetings are particularly difficult for shareholders to attend. Partly to dilute the influence of outsiders, more than 80% of Japanese companies hold their annual meetings on the same day. This year, the day was June 27.
Moreover, Japanese companies do not encourage give-and-take with shareholders. Nine out of 10 meetings take less than a hour. Given these constraints, few if any U.S. pension funds have expressed their wishes to management.
Controversy Is Rare
Mr. Economides said 15 U.S. pension funds voted their proxies this year. He expects as many as 50 funds to vote next year.
Given the brevity of a Japanese annual meeting, it is no surprise that the resolutions are rarely controversial. Most involve the reappointment of directors and the approval of dividends.
But as more U.S. pension funds vote at annual meetings, the funds may be able to put forward their own resolutions.