Aug 15, 2022   SOURCE: BusinessWire

Equinox Partners Announces Investment Stewardship Policy to Improve Board Governance in Mining

Equinox Partners Investment Management, LLC, a long-term value investor, today announced its new investment stewardship policy toward directors of public companies. Based on years of active engagement with boards, Equinox Partners has decided to adopt a strict policy of voting against directors who have served for two or more years but have invested less than two years of director’s fees into the company’s stock.

Equinox Partners estimates that as a result of this policy it will vote against approximately 10% of the board-slate candidates in the 2023 proxy season. By adopting a clear, lower-bound for director share ownership, Equinox Partners intends to push back on the growing indifference of boards to non-executive director stock ownership and the decision of some companies to prohibit non-executive directors from owning stock all together.

“Shareholders should not support directors who lack meaningful financial alignment with the companies for which they bear ultimate governing responsibility,” said Sean Fieler, President and Chief Investment Officer of Equinox Partners. “We have seen a troubling deemphasis of financial alignment among international mining companies. By elevating individuals who do not own stock and are unlikely to acquire a significant financial interest in the company they oversee, the board is adding colleagues who will tend to prioritize collegiality and reputation over its company’s financial interests.”

Since 2015, the insider ownership amongst the gold mining companies that make up the MVIS Global Junior Miners Index (MVGDXJTR) has fallen over the past seven years. The proximate cause of this decline is board turnover driven by passive investors.

“Unlike activists who propose specific directors, large passive managers propose categories of directors rather than individuals. Corporate insiders have largely acquiesced to these demands by nominating new directors that fit the passive investors’ criteria, but are unlikely to rock the boat,” said Fieler.

“…the Canadian E&P industry is an example of a more responsible approach to director alignment. It is common for Canadian E&P companies to mandate that board members own at least three years of directors’ compensation in stock. Not coincidentally, the Canadian E&P industry has turned into a sector which prioritizes returns on and of owners’ capital.” (Equinox Partners Q2 Letter)

About Equinox Partners

Equinox Partners, headquartered in Connecticut is a long-term value investor with a large weighting in precious metals miners. Equinox Partners’ high conviction approach to fundamental investing involves a strong, active focus on corporate governance.