AllianzGI takes stock of AGM season

05/02/2018

Summary

Allianz Global Investors, one of the world’s leading active investment managers, has further increased transparency of its stewardship activities with real time website disclosure of AllianzGI’s voting activity on resolutions at thousands of companies, alongside an explanation of why against or abstention voting decisions were made.

  • New proxy voting data highlights global disparity in approach to governance
  • UK continues to demonstrate global leadership on corporate governance

 

Allianz Global Investors, one of the world’s leading active investment managers, has further increased transparency of its stewardship activities with real time website disclosure of AllianzGI’s voting activity on resolutions at thousands of companies, alongside an explanation of why against or abstention voting decisions were made.

 

Continued commitment to active stewardship

The development of a new proxy voting tool highlights the importance AllianzGI places on adopting a global approach to active stewardship and ESG integration.

Last year, AllianzGI significantly increased its votes against company management on issues like re-election of directors, executive pay and capital authorisations. AllianzGI actively engages companies around the world on strategy, governance, risk management, environmental, social and other topics that are deemed material for AllianzGI’s investments.

In 2017, AllianzGI voted at 7,961 shareholder meetings and on 83,488 proposals from both management and shareholders. AllianzGI voted against at least one agenda item at 68 per cent of all shareholder meetings globally, opposing 24 per cent of all resolutions, underlining AllianzGI’s willingness to vote against proposals that do not meet its expectations of investee companies.

 

Regional variations

AllianzGI’s voting patterns highlight significant regional differences in corporate governance standards around the world. AllianzGI’s voting disclosure tool shows that in Japan AllianzGI voted against 45 per cent of all proposals, compared to 35 per cent in the US, 33 per cent in France, 28 per cent in Hong Kong, 13 per cent in Germany and just 6 per cent in the UK, reflecting the difference stages of development in governance standards in the US and Japan compared to some European markets.

Eugenia Unanyants-Jackson, Head of ESG Research at AllianzGI, said “Integration of ESG factors into our investment process makes sense from a risk and return perspective, and forms part of our fiduciary duty to clients”.

“This new proxy voting disclosure tool offers fully automated timely disclosure of our proxy voting statistics, vote direction for all shareholder meetings and, crucially, our rationale for against or abstention votes. This provides our clients with a high level of transparency and gives us a powerful platform which will further facilitate our engagement with companies.”

 

Total percentage of AllianzGI votes against proposals at shareholder meetings by country

Country % votes against all proposals
Japan 45%
US 35%
France 33%
Hong Kong 28%
Italy 24%
Switzerland 23%
Germany 13%
UK 6%

 

Total percentage of AllianzGI votes against compensation related proposals by country

Country % votes against all proposals
Italy 56%
Germany 52%
US 45%
Japan 42%
France 40%
Switzerland 30%
UK 14%

 

Total percentage of AllianzGI votes against director related proposals by country

Country % votes against all proposals
Japan 49%
France 36%
US 31%
Hong Kong 31%
Switzerland 19%
Germany 11%
UK 7%

 

Eugenia Unanyants-Jackson, Head of ESG Research at AllianzGI, continued,

“The regional variances in total percentage votes at shareholder meetings demonstrate the significant global disparity in approaches towards corporate governance. The UK companies remain ahead of peers as shown through the statistics, with us only voting against 14 per cent of compensation related proposals in the UK last year. This contrasts to the US, where we were compelled to vote against 45 per cent of compensation proposals, demonstrating that US companies have a long way to go in this space.

“One of the key reasons for our high level of votes against compensation proposals in the US was a weak alignment between pay and performance, with US companies continuing to show an insufficient link between long-term performance KPIs and executive incentive plans.

“Director related proposals is another area where we see a vast gap in votes against between regions. In the US and France, the percentage votes against director related proposals are more than 30 per cent compared to only 7 per cent in the UK.

“These votes are cast based on the same criteria in each region and high levels of disparity should be a wake-up call for companies in those markets which are lagging, including US and France, to start adapting to globally rising standards.”

Simon Gergel, CIO UK equities at AllianzGI, said,

“The UK has a long history of taking a lead on corporate governance issues and has some of the best standards in the world.

“This is reflected in our voting record, where there have been fewer votes against AGM resolutions in the UK than in other countries. But we can afford to be complacent. There is still significant room for improvement, especially regarding the linkage between executive pay and business value drivers, and the number of board directorships that an individual can reasonably manage.

“However, it is important when considering potential reform of stewardship regulations and practices, that the high UK standards are appreciated, within a global context, and built upon. Recent innovations, such as the Investor Forum, of which Allianz Global Investors is a founder member, demonstrate that the UK can continue to innovate, as a global leader in this field.”

 

UK specific insight

In the UK, the primary reasons for voting against 14% of compensation-related proposals include:

  1. Insufficient link between performance KPIs under executive incentive plans and key business value drivers from AllianzGI perspective;
  2. Proposed increases in the size of incentive awards for executive directors without a commensurate increase in performance requirements;
  3. Substantial salary increases that are not linked to material changes in the business or in the role and responsibilities of executive directors;
  4. Poor disclosure of performance targets under annual and long-term incentive schemes, which compromised our ability to assess both the robustness of the targets and the appropriateness of payouts to the management.

 

In the UK, AllianzGI did not support 7% of director related proposals:
In particular, AllianzGI voted against directors who held a large number of board mandates, which AllianzGI believe can compromise their ability to discharge their board and committee responsibilities to a high standard both under normal circumstances and when special situations or unexpected developments require substantial additional time commitment from directors.

 

Notes to editors

Additional data, supplementing the proxy voting data, has been used to calculate some of the statistics above.
To view the proxy voting tool, please click here and to view our ESG approach, please click here.
Data correct as of 18 January 2018

 


 

For further information please contact:
Nadia Hassini +44 (0)20 3246 7558
Sarah Einig +44 (0)20 3246 7846
Alastair Fairbrother +44 (0)20 3246 7432
ukmedia@allianzgi.com

 

About Allianz Global Investors
Allianz Global Investors is a diversified active investment manager with a strong parent company and a culture of risk management. With 25 offices worldwide, we provide global investment and research capabilities with consultative local delivery. We have around EUR 500 billion in AUM for individuals, families and institutions worldwide and employ over 650 investment professionals.

 

Data as of 30 September 2017

 

For professional investors only. Investing involves risk. The value of an investment and the income from it may fall as well as rise and investors may not get back the full amount invested. Infrastructure debt investments are highly illiquid and designed for long term investors only. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer companies at the time of publication. The data used is derived from various sources, and assumed to be correct and reliable, but it has not been independently verified; its accuracy or completeness is not guaranteed and no liability is assumed for any direct or consequential losses arising from its use, unless caused by gross negligence or wilful misconduct. This is a marketing communication issued by Allianz Global Investors GmbH, www.allianzgi.com, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Landstrasse 42-44, 60323 Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht (www.bafin.de). Allianz Global Investors GmbH has established a branch in the United Kingdom, Allianz Global Investors GmbH, UK branch, www.allianzglobalinvestors.co.uk, which is subject to limited regulation by the Financial Conduct Authority (www.fca.org.uk). Details about the extent of our regulation by the Financial Conduct Authority are available from us on request.

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