Proposal and Background
The Daniel L. Altschuler 1986 Trust, 160 Riverside Drive, Apt. 9B, New York, NY 10024, the beneficial owner of 754 shares of our common stock, has given notice that it intends to introduce the following resolution at the Annual Meeting. In accordance with the applicable proxy regulations, the text of the proponent’s proposal and supporting statement, for which we accept no responsibility, are set forth immediately below:
PROXY VOTING REVIEW BY BANK OF NEW YORK MELLON
Whereas: Bank of New York Mellon (“Bank”) is a respected global leader in the financial services industry and rightly proud of its good governance, positive social and environmental programs and services to clients.
For example, in 2015 the Bank announced it would make available a “wide range of environmental, social and governance (ESG) data and insight to its depository bank clients”, the first bank to offer this service to issuers, noting the growing momentum from investors and companies to more carefully consider the implications of ESG factors.
In a public statement before the Paris Climate conference, Bank of New York Mellon President Karen Peetz stated “Businesses, in partnership with governments, non-governmental organizations and others, have an important role to play in shaping a low-carbon future. Taking strategic action to mitigate climate change is good for our clients, our investors, our people and our world.”
Bank of New York Mellon and its subsidiaries invest money on behalf of their clients and as part of their fiduciary duty are responsible for recommending votes or voting proxies in their portfolios. Proxy voting is one of the principal ways investors can communicate with companies.
The Bank’s unit that provides guidance on voting proxies rightly focuses on their clients’ economic interests in giving voting advice and voting proxies and actively votes on numerous governance reforms.
Yet the proxy voting record of the Bank’s investment subsidiaries, guided by the Bank’s recommendation and publicly reported in official N-PX forms, demonstrates a consistent vote against virtually all environmental resolutions, even when there is a strong business and economic case supporting the resolution.
Many shareholder resolutions on the topic of climate change simply ask for more disclosure or goals to reduce greenhouse gas. Funds managed by Bank of New York Mellon subsidiaries voted against virtually all these resolutions. In contrast funds managed by investment firms such as Goldman Sachs, Wells Fargo, Morgan Stanley, and Alliance Bernstein supported the majority of these resolutions and investors like State Street and TIAA voted in favor of a significant percentage of resolutions on climate.
These incongruities pose a reputational risk to the company and given the severe impacts of climate change, including significant risks to investors and the economy, there is risk to BNY Mellon and its clients if its proxy voting practices ignore climate change.
We believe Bank of New York Mellon should review and report on its proxy voting policies and record compared to the Bank’s public statements on climate change.
Resolved: Shareowners request that the Board of Directors issue a report on proxy voting and climate change to shareholders prepared at reasonable cost and omitting proprietary information.
This assessment and report would review proxy votes appearing inconsistent with the company’s climate change positions and scientific consensus, and provide explanations of the incongruence. The report can also review future steps to enhance congruency between climate policies and proxy voting.
Board of Directors’ Response
Adoption of this proposal requires the affirmative vote of a majority of the votes cast on the proposal at the Annual Meeting by the holders of our common stock voting in person or by proxy. Unless contrary instructions are given, shares represented by proxies solicited by the Board will be voted “against” the stockholder proposal regarding an independent chair.
Board of Directors’ Response
After careful consideration of this proposal, we have concluded that it is not in the best interests of our stockholders. We therefore recommend that you vote AGAINST this proposal for the following reasons:
The proposal erroneously conflates BNY Mellon’s position on climate change with the separate proxy voting practices of our subsidiaries that act as investment advisers. The Board must act in what it believes to be the best interests of the company and our stockholders, including appropriately addressing issues related to climate change. In this regard, we note that BNY Mellon’s commitment to carbon reduction has earned the company recognition as a leader in efforts and actions to combat climate change. The company was carbon neutral in 2015 and 2016 and has a strategy in place to remain carbon neutral in 2017. The company’s efforts to mitigate climate change have been widely recognized, earning us a place on CDP’s Climate A List for four consecutive years, inclusion in the FTSE4Good Index for four consecutive years and inclusion in the Dow Jones Sustainability World Index for three consecutive years. We have also earned the top ranking among our peers from Bloomberg for environmental, social and governance (“ESG”) disclosure.
As an entirely separate matter, our investment adviser subsidiaries (“Member Firms”) have a responsibility to act in the best interests of their clients when voting proxies on behalf of those clients. That includes making their own determinations as to how to vote on environmental proposals. The stockholder proposal’s recommendation that the Board intervene in oversight of the Member Firms’ proxy voting would increase the company’s involvement in Member Firms’ proxy voting in a manner that is both significant and contrary to their obligations. If implemented, the stockholder proposal would elevate the social objectives of BNY Mellon over the obligation of the Member Firms to vote proxies based on a consideration of their clients’ best interests.
Our Member Firms’ proxy voting records reflects a thoughtful, case-by-case approach consistent with their fiduciary duties. For many of our Member Firms, proxy voting is assisted and guided by our Proxy Voting and Governance Committee, which has established voting guidelines designed to maximize the economic value of Member Firms’ clients’ securities. Under these voting guidelines, environmental proposals are reviewed on a case-by-case basis, with proxy votes generally cast for stockholder-sponsored environmental proposals when “the proposal reasonably can be expected to enhance long-term stockholder value and when management fails to respond meaningfully to the proposal.” Given that our publicly disclosed voting guidelines already articulate voting policies with respect to environmental proposals and that our proxy voting record is already publicly filed with the SEC, the Board believes that no benefit would be realized from the resources that would be spent to analyze each voting decision made by our Member Firms and determine whether it was consistent with BNY Mellon’s own internal position on climate change.
The Board of Directors unanimously recommends that you vote “AGAINST” the stockholder proposal.