Allianz Global Investors, one of the world’s leading active investment managers, has received an ‘A+’ from the PRI Association for its overarching approach to ESG Strategy and Governance for the fourth year in a row. This category encompasses environmental, social and governance (ESG) policies, objectives and memberships, and considers how the firm promotes its ESG efforts internally and externally.
AllianzGI voting at AGMs underscores disparity in governance standards
Participating in 9,532 (2018: 8,535) shareholder meetings over the course of 2019, AllianzGI voted against, withheld or abstained from at least one agenda item at 77% (2018: 75%) of all meetings globally. It opposed 24% (2018: 24%) of all resolutions globally.
Compensation and director-related proposals remain core areas of scrutiny
Growing interest in, and strong support for, shareholder resolutions on environmental and climate topics
UK leads the way in corporate governance standards for 3rd consecutive year; Japan and USA lag behind
Participating in 9,532 (2018: 8,535) shareholder meetings over the course of 2019, AllianzGI voted against, withheld or abstained from at least one agenda item at 77% (2018: 75%) of all meetings globally. It opposed 24% (2018: 24%) of all resolutions globally. These figures reflect AllianzGI’s highly active and globally consistent approach to stewardship and a willingness to vote against proposals that do not meet its expectations of investee companies as well as fulfilling its duty to act in the interests of clients by considering each proposal on merit.
Compensation related proposals continued to stand out as the most contentious area globally during 2019, with AllianzGI voting against 48% (2018: 52%) of all compensation related management proposals. A large proportion of these votes were driven by concerns over insufficient alignment between the management and shareholders as expressed through weak links between pay and performance as well as KPIs and targets under incentive schemes which did not meet key business value drivers.
We treat proxy voting as integral to our fiduciary responsibility to clients and to Allianz Global Investors’ stewardship process. We see active participation in shareholder meetings of the companies we invest in as a form of engagement; an opportunity to communicate with company management, other investors and the market.
AllianzGI recognizes that voting power comes with responsibility and we actively undertake and encourage constructive engagement with investee companies. At the same time, we use our voting power to inform companies of our views and expectations, and to protect and advance the interests of our clients, which means that we are prepared to vote against management as and when necessary to achieve these objectives.
On compensation related proposals
As well as concerns over weak links between pay and performance, other factors which led to votes against compensation included highly dilutive or short term equity schemes as well as termination agreements and severance provisions which would allow for excessive payouts on departure or change of control. Abstentions on compensation proposals increased in 2019, 7% compared to 4% in 2018, reflecting a growing number of engagements with investee companies.
On director related proposals
The election/re-election of directors was a key area of focus globally in 2019, with AllianzGI voting against non-independent directors where there was insufficient balance of independence on the board or key board committees – with main factors across the year including long tenure, conflicts of interests, and compensation arrangements that compromised directors’ independence.
Overboarding remained a major issue in a number of markets. As demands of non-executive directors increase, AllianzGI expressed concerns where the full-time executives took on more than one executive role, and non-executive directors took on a large numbers of appointments in public and private companies.
Concentration of power at the top of a company through combined chair/CEO roles led to votes against where appropriate checks and balances, such as Lead Independent Director and strong board independence, were not in place.
Appointment of External auditors
Tenure of external auditors was a prominent area AllianzGI focused on during 2019, voting against appointment of external auditors where an incumbent auditor had been auditing the company’s accounts for over 20 years and there was no commitment from the company to re-tender the audit mandate.
AllianzGI continued to vote against large capital issuance authorisations that were not supported by credible business rationale from management.
Share issuance or buy-back proposals were not approved where these could be used as a takeover defence mechanism.
AllianzGI did not support multiple share-class structures where these would lead to differential ownership rights.
AllianzGI also voted against private placements and share buy-back proposals where these would be implemented on terms that would be value destructive for the existing shareholders in the company.
AllianzGI believes that shareholder proposals are an important element of a healthy stewardship system and a valuable interaction between companies and their shareholder base. Shareholder proposals offer companies an important insight into views and concerns of their investors, and meaningful support for issues raised in shareholder proposals merit careful consideration by companies’ boards and management.
Resolutions on climate related topics including calls to report on climate related policies and actions, greenhouse gas emissions, carbon emission reduction targets, and business risk and impact analysis under 2 degrees scenario were strongly supported in 2019.
AllianzGI supported shareholder proposals that sought to improve corporate governance practices of investee companies and to enhance shareholder rights. These included proposals to appoint an independent board chairman, introduce majority voting for director elections, eliminate differential ownership and control structures, adopt share retention policy for executive directors, and reduce ownership thresholds for shareholders to call a special meeting.
On the social side, AllianzGI supported proposals seeking transparency of political contributions and lobbying payments and policy, reporting on workforce diversity and gender pay gap, as well as human rights and workplace harassment related issues.
The disparities are significant enough that this could be taken as a proxy for the standard of governance norms in each country.
Total percentage votes against all management proposals by location
% votes against management proposals 2019
Total percentage votes against compensation related proposals by location
% votes against compensation related proposals 2019
Total percentage votes against director related proposals by location
Allianz Global Investors is a leading active asset manager with over 790 investment professionals in 25 offices worldwide and managing more than EUR 557 billion in assets for individuals, families and institutions*.
Active is the most important word in our vocabulary. Active is how we create and share value with clients. We believe in solving, not selling, and in adding value beyond pure economic gain. We invest for the long term, employing our innovative investment expertise and global resources. Our goal is to ensure a superior experience for our clients, wherever they are based and whatever their investment needs.
AllianzGI reports strong growth in sustainable assets
Allianz Global Investors (AllianzGI), a leading active asset manager, has grown the volume of sustainable investments it manages over the last three years from around EUR 25bn to EUR 165 billion by the end of 2019.
Sustainable assets grew to EUR 165 billion and company engagement increased by 31% according to new Sustainability Report
Coronavirus set to strengthen drive towards sustainability
Climate transition becoming a central theme across asset classes
AllianzGI responds to growing interest for strategies with positive societal outcomes with new UN SDG-aligned offering
Investing involves risk. The value of an investment and the income from it will fluctuate and investors may not get back the principal invested. Past performance is not indicative of future performance. This is a marketing communication. It is for informational purposes only. This document does not constitute investment advice or a recommendation to buy, sell or hold any security and shall not be deemed an offer to sell or a solicitation of an offer to buy any security.
The views and opinions expressed herein, which are subject to change without notice, are those of the issuer or its affiliated companies at the time of publication. Certain data used are derived from various sources believed to be reliable, but the accuracy or completeness of the data is not guaranteed and no liability is assumed for any direct or consequential losses arising from their use. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted.
This material has not been reviewed by any regulatory authorities. In mainland China, it is used only as supporting material to the offshore investment products offered by commercial banks under the Qualified Domestic Institutional Investors scheme pursuant to applicable rules and regulations. This communication's sole purpose is to inform and does not under any circumstance constitute promotion or publicity of Allianz Global Investors products and/or services in Colombia or to Colombian residents pursuant to part 4 of Decree 2555 of 2010. This communication does not in any way aim to directly or indirectly initiate the purchase of a product or the provision of a service offered by Allianz Global Investors. Via reception of his document, each resident in Colombia acknowledges and accepts to have contacted Allianz Global Investors via their own initiative and that the communication under no circumstances does not arise from any promotional or marketing activities carried out by Allianz Global Investors. Colombian residents accept that accessing any type of social network page of Allianz Global Investors is done under their own responsibility and initiative and are aware that they may access specific information on the products and services of Allianz Global Investors. This communication is strictly private and confidential and may not be reproduced. This communication does not constitute a public offer of securities in Colombia pursuant to the public offer regulation set forth in Decree 2555 of 2010. This communication and the information provided herein should not be considered a solicitation or an offer by Allianz Global Investors or its affiliates to provide any financial products in Brazil, Panama, Peru and Uruguay. In Australia, this material is presented by Allianz Global Investors Asia Pacific Limited (“AllianzGI AP”) and is intended for the use of investment consultants and other institutional/professional investors only, and is not directed to the public or individual retail investors. AllianzGI AP is not licensed to provide financial services to retail clients in Australia. AllianzGI AP (Australian Registered Body Number 160 464 200) is exempt from the requirement to hold an Australian Foreign Financial Service License under the Corporations Act 2001 (Cth) pursuant to ASIC Class Order (CO 03/1103) with respect to the provision of financial services to wholesale clients only. AllianzGI AP is licensed and regulated by Hong Kong Securities and Futures Commission under Hong Kong laws, which differ from Australian laws.
This document is being distributed by the following Allianz Global Investors companies: Allianz Global Investors U.S. LLC, an investment adviser registered with the U.S. Securities and Exchange Commission; Allianz Global Investors Distributors LLC, distributor registered with FINRA, is affiliated with Allianz Global Investors U.S. LLC; Allianz Global Investors GmbH, an investment company in Germany, authorised by the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin); Allianz Global Investors (Schweiz) AG; Allianz Global Investors Asia Pacific Ltd, licensed by the Hong Kong Securities and Futures Commission; Allianz Global Investors Singapore Ltd, regulated by the Monetary Authority of Singapore [Company Registration No. 199907169Z]; Allianz Global Investors Japan Co, Ltd., registered in Japan as a Financial Instruments Business Operator (Registered No. 424) The Director of Kanto Local Finance Bureau (Financial Instruments Business Operator), No. 424, Member of Japan Investment Advisers Association and Investment Trust Association, Japan]; and Allianz Global Investors Taiwan Ltd, licensed by Financial Supervisory Commission in Taiwan.