Stewardship | ~4 min read
Governance in the spotlight at shareholder meetings
Following a notable weakening of corporate governance safeguards, many shareholders have demonstrated a sharper focus on governance practices and strengthening board accountability in this year’s proxy voting season.
We believe that effective corporate governance plays a central role in long-term value creation and, as such, it’s a topic we have prioritised for several years. We actively engage with investees on governance issues and this year further advanced this focus by once again pre-announcing our voting intentions on governance-related shareholder resolutions.
This action signals our expectations towards companies while also drawing market attention to specific governance issues, including these three important areas:
Shareholder rights: In the US, in the context of an evidently broad shift in shareholder rights, we sought to highlight the importance of maintaining shareholder voice commensurate with long-term capital commitment, for example upholding one-vote-one-share principle. We supported shareholder proposals on this issue at the AGMs of Meta and Exxon.
For the first time in China, we pre-announced our intention to support the election of an independent director proposed by shareholders at the AGM of technology firm Delton. We believe that regular refreshment of the independent director cohort is in our interest, especially in founder-influenced ownership structures.
Transparency that matters: In our view transparent and standardised disclosure on human capital is a key element of effective corporate governance, particularly for large employers. While we see a cut back in voluntary disclosures, we urge companies to continue these disclosures when human capital has high materiality to the company. We supported this as a shareholder proposal at the AT&T AGM.
Driving alignment through remuneration: Executive remuneration is an important component of corporate governance. Poorly designed incentives for example may result in management that is not best aligned with our interests as shareholders. This is why it is important for us to have an adequate level of transparency into remuneration arrangements. Our previous structured engagement with several Swedish companies did not yield satisfactory progress, leading to us pre-announcing our intention to vote against specific remuneration-related agenda items – read more.
A consistent, global, stewardship signal
Pre-announcing our votes underscores a proven stewardship approach to highlight thematically important issues. We put great effort into developing in-house views and positions on corporate governance and proxy voting, informed by in-depth research, analysis and engagement – often over several years.
Typically, we vote at over 8,000 shareholder meetings each year and we believe continuing to apply this approach globally ensures that the importance of good governance remains in the spotlight.
Stay tuned for more proxy voting insights from our Stewardship team.
