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Feb 01, 2016

Buffett, Dimon and Fink meet to discuss governance and shareholder ‘friction’

Talks aim to draft outline of best practices in corporate governance, FT says

JPMorgan Chase CEO Jamie Dimon, BlackRock CEO Larry Fink, Berkshire Hathaway chief Warren Buffett and other major investors have held several secret meetings to discuss ways to improve governance of public companies, encourage longer-term investing and ‘reduce friction with shareholders,’ according to a report by the Financial Times.

The group of leading asset managers, which also includes the heads of Fidelity, Vanguard and Capital Group, started meeting in August, with the latest meeting in December at JPMorgan’s headquarters in New York, the newspaper says, without stating where it got the information.

The talks are meant to draft a proposal for best practices in relation to corporate governance, covering subjects such as shareholder rights, executive compensation, board tenure and the role of boards of directors, according to the FT. All topics covered have been subject to debate in recent shareholder meetings between companies and activist shareholders.

Mark Wiseman, CEO of the Canada Pension Plan Investment Board and Jeff Ubben, the head of activist hedge fund manager ValueAct, ‘are understood’ to have contributed to the talks, the newspaper says, again without naming a source. The group will not complete talks for several months, the FT adds.

The meetings come amid a growing push by activist investors for proxy access and increased returns for investors, and intensifying debate over the role of corporations in climate change, diversity and other ESG issues.

In its outlook for 2016, Hermes Asset Management predicts proxy access will continue to dominate talks between shareholders and companies in the US, more countries will launch stewardship codes and ‘awareness of the materiality of governance issues among shareholders will continue to grow’.

Tightening monetary policy, a turbulent geopolitical scene and climate change will also increasingly affect the strategies and thinking of investors in 2016, Hermes says.