So what O’Sullivan and other members of a CMSF study tour saw in the Netherlands was a revelation. “We visited funds which were voting all their proxies, and had together built a sophisticated system to add value by doing so,” according to O’Sullivan, who by then had been a director of industry fund CareSuper for four years. “They’d underwritten a governance research service to which they subscribed for US$400,000 per year, because they wanted their approach to voting to be evidence-based. Then they maximised their positive impact by collaborating and deciding on how to vote as a bloc.” O’Sullivan became a convert to the approach, and as soon as he was back in Australia he began talking to local super funds about creating a similar collective to advance the cause of good governance. From O’Sullivan’s cold calls has grown an organisation that counts 40 local funds as members, as well as two international associates in the formidable form of the UK’s Universities Superannuation Scheme and RAILPEN Investments.
Together, these funds speak for over $330 billion under management, one-third of which O’Sullivan estimates would be invested in Australian equities. That $110 billion, then, represents roughly 10 per cent of the total capitalisation of the ASX – a powerful voting bloc by anyone’s measure. It now employs seven people, including former UniSuper boss Ann Byrne as chief executive, and runs its own proxy voting alert and recommendation service covering the largest 200 Australian stocks. It also maintains an international voting alert service, with analysis outsourced to Glass Lewis in San Francisco. O’Sullivan has chaired ACSI since its inception, and put together its very first conference back in 2002. He plans to step down at this month’s conference, the council’s 10th. ACSI wasn’t always powerful of course, and certainly was not in 2004 when it took on what remains its greatest corporate governance battle – against Rupert Murdoch and his little poison pill. After reluctantly backing News Corporation’s move from Adelaide to Delaware in 2004, the ACSI investors felt they had been hoodwinked when Murdoch created the pill shortly thereafter, effectively capping News’ share price in the interest of defending Murdoch family control from Liberty Media, which then held 18 per cent of the stock. With the big retail funds managers conspicuously silent, O’Sullivan spearheaded a group of six ACSI members who took on the big ex-Australian, and after a three-year battle, eventually succeeded in requiring News Corp’s board to put any poison pill extension to a shareholder vote.