FairPensions: US Schemes Voice Discontent With BP While UK Avoids Spotlight

(April 13, 2011) — Two large US pension funds — the $234.7 billion California Public Employees’ Retirement System (CalPERS) and the $156.8 billion Tallahassee-based Florida State Board of Administration (FSBA) — have joined a list voting against BP at its annual general meeting over anger at the Gulf of Mexico oil spill.

“CalPERS is concerned with the absence of information related to key performance indicators and re-evaluation of the board’s role in oversight of risk management,” the nation’s largest public pension said in a statement.

Both CalPERS and FSBA said they would oppose the approval of BP’s annual report and the re-election of Bill Castell, non-executive director and head of the safety, ethics and environment assurance committee, who faces resentment from investors over the way he handled the largest oil spill in US history.

CalPERS, which holds roughly $450 million in BP shares, will vote against approval, while FSBA, which manages more than $100 billion of securities, will also oppose, according to documents posted on their company websites. UK schemes, however, have not been as vocal in asserting their discontent as shareholders, according to FairPensions, a UK-based advocacy group. In response to the moves by the US schemes, Matthew Butcher, spokesperson of FairPensions said:

“As a group that is interested in active shareholders we have noticed that there seem to be a swathe of US investors who are happy to publically declare there intentions while very few investors here in the UK are doing so.”

Louise Rouse, director of engagement at FairPensions, added:

“Although investors from the United States and continental Europe have been coming forward to declare their voting intentions the majority of British investors have been conspicuous only by their silence in the run up to the most anticipated AGM of 2011…In the interests of market transparency and for the benefit of pensions savers, we would like to see many more large institutional investors in Britain follow the lead of overseas investors in declaring their voting intentions ahead of controversial AGMs.”

In June of last year, CalPERS revealed that it lost a total of $284.6 million in value following the oil disaster, which wiped out more than $1.4 billion from BP shares held by US state pensions. Other public retirement funds with large holdings in the oil giant included the California State Teachers’ Retirement System (CalSTRS), which lost roughly $104.8 million, followed by Florida’s state pension and the Texas Teachers Retirement System, according to Bloomberg data compiled following the disaster. “We are large enough to sustain reversals of individual portfolio companies,” CalPERS’ Clark McKinley told aiCIO in June. “As a long-term investor, we have been able to weather similar setbacks to other companies over the years. However, we certainly are concerned about the loss of BP share value and will be engaging the company to discuss the impact of the Gulf of Mexico crisis along with corporate governance issues.”