Brendan Wood International’s Shareholder Confidence Index Team announced Thursday the results of the current poll of Canadian Oil Sands shareholders concerning Suncor’s recent offer as well as an update on shareholder confidence in Canadian Oil Sands’ board and management.
Excluding ETFs and Index funds, who may remain neutral or complacently vote with the proxy, the majority of active institutional holders reported being in favor of acceptance of Suncor’s offer. The same share owners are highly critical of the board and management of Canadian Oil Sands, assigning them the lowest performance scores on the Brendan Wood 1400 name Index. This BottomGun ranking has been attributed to Canadian Oil Sands for several years. Last week many significant shareholders openly questioned the very raison d’être of the Canadian Oil Sands board, which is largely viewed as redundant by active institutional shareholders in the poll.
With the exception of an outspoken large individual holder who feels Suncor’s offer is too light, active institutional funds are almost unilaterally in favor of acceptance of Suncor’s bid and effectively the dismemberment of the COS board and management. Institutions mentioned that the COS board would likely be released in the event that Suncor’s offer is accepted. Board objectivity is a normal item on shareholders’ agendas in such circumstances but it maybe an insurmountable hurdle for COS’s board to clear insofar as institutional holders believe none of the current board members will be added to Suncor’s team in the event of a deal. Many say that acceptance of Suncor’s offer will end a blissful era of compensation and benefits.
However, the majority of COS stock is held by retail investors who have only just begun to be polled. The institutional poll will be further updated along with retail results in the days ahead.
What about the index fund votes?
“Neutrality or complacent voting amongst indexers, not just in this situation but across the board, is a potentially serious weakener of value”, said Brendan Wood. Some index funds in the COS/Suncor poll reported an automatic ‘vote for the slate’ policy.
“Management is the driving force behind the efficiency, security and performance of a company. Index funds are a very powerful voting force in the market. Neutrality, the voting policy often hinged to the algorithmic approach of the indexer can unfortunately lead to blind votes “for” slates which can complacently perpetuate some of the poorest performing managements on the index”, according to Mr. Wood.
The Brendan Wood shareholder confidence data encourages the active use of votes by index funds, especially in situations where management/board conspicuously underperform. “Good managements may not need index support but poorly performing managements can be upheld by inequitable index votes thus extending their tenure, at the potential expense of all share owners. Index votes cast thoughtfully instead of abstained or automatically cast for proxy can greatly help to enhance accountability and value throughout the index”, commented Brendan Wood.
Brendan Wood International (BWI) is an independent performance advisor and proxy polling firm which rates the management performance of 1400+ prominent names in the public markets worldwide. Committed to an even playing field and optimal transparency, BWI intelligence is available to investors and corporate clients alike. BWI also serves investment banks and broker dealer firms, providing competitive intelligence and performance counselling concerning their client relationships. Brendan Wood and partners have conducted more than one thousand off sites and management conferences in fifty cities. Originators of the TopGun recognition program, BWI represents TopGun talent and offers placement services to clients seeking game changer executives and professionals.
BWI emphasizes that all reports, evaluations and assessments, represent Brendan Wood International’s subjective judgment and opinions, based on our years of experience and on information obtained by us in the course of our research. The factual information contained in our reporting has been obtained by us from third parties on whose responses we have relied in good faith, independent verification by Brendan Wood International being, under the circumstances, impossible. While we believe our reports to be an invaluable tool in formulating independent thinking, strategies and judgments of readers, the foregoing should be borne in mind.
BWI reports and releases are not meant as investment advice and should not be interpreted as advising on the value of a company’s securities, the advisability of investing in, purchasing or selling any company’s securities or any other conclusion relating to investment/divestiture of a company’s securities. Finally, BWI reporting is not intended as an offer or solicitation for the purchase or sale of any of company’s securities.
