TUC Fund Manager Voting Survey 2015 A survey of the voting and engagement records and processes of institutional investors CONTENTS Contents Introduction 02 Key facts about the 2015 survey 02 Section One Voting and engagement records 04 Voting analysis — by investor 64 Voting analysis — by company 74 Appendix Circulation and response list 79 TUC FUND MANAGER VOTING SURVEY 2015 | 01 INTRODUCTION two respondents supported 80 per cent or more Introduction remuneration policies, while four did not support any. This is the TUC’s twelfth fund manager voting survey. It is intended to give trustees and others information on how fund managers exercise voting rights in relation to controversial issues at company AGMs, and Key facts about an insight into voting and engagement processes. With the exception of 2014, the Survey has been carried out the 2015 survey every year since 2002. This year’s survey is the first that has taken place Response rate since the government introduced new remuneration requirements in October 2013. These established The response rate to this year’s survey was 65 per revised company reporting requirements on executive cent, the best that we have had since 2005. This remuneration. They also introduced a new binding year, 30 respondents in total took part in the survey vote for shareholders on future remuneration policy, out of a target group of 46. All but one respondent alongside an advisory remuneration report vote (29) provided voting data in their response; and one which focuses on how remuneration policy has respondent responded to section two of the survey on been implemented over the previous year. This new policies and processes only. voting structure has thrown up some interesting developments in terms of voting patterns and some The target group has shrunk slightly since the fund managers have taken very different approaches to 2013 survey as a result of mergers among some these two votes. In part two of the Survey on policies fund management organisations, and some names and practices, respondents were asked for their views have changed as a result1. In 2013 and in 2012, 28 on the different elements of the new requirements. organisations took part in the survey out of a target group of 48, a response rate of 58 per cent. The The last Survey in 2013 covered the ‘shareholder response rate this year compares with response rates spring’ of 2012 and found evidence that some of 51 per cent in 2011, 49 per cent in 2010, 40 per cent asset managers were more willing to vote against in 2009, 45 per cent in 2008, 42 per cent in 2007, 61 management over remuneration issues that year. In per cent in 2006 and 68 per cent in 2005. addition, the 2013 Survey found an overall reduction in the proportion of abstentions, whereas oppose votes We are very grateful to all the organisations that increased, suggesting a tougher approach on the part have taken part in the survey, both those who have of some investors. supported the survey over many years and those who have responded for the first time this year. We The new remuneration structure means that direct hope that the trend towards higher response rates will comparisons with previous years should be treated continue in future years. with some caution. It is nonetheless striking that the median level of support for remuneration reports this year was 40 per cent, significantly lower than Contents of the survey 30 per cent in 2013. However, the level of support for remuneration policy was lower, with a median level of The survey consisted of two sections. Section one support of 27 per cent. Support for incentive schemes asked for voting and engagement records on 61 items was also considerably lower than in previous years, at AGMs and EGMs from January to December 2014. with a median level of support of 20 per cent, compared The resolutions in the survey were those which with a median of 50 per cent in both 2013 and 2012. attracted the highest oppose votes at meetings in 2014 across a range of issues, supplemented with topical The differentiation between investors that we have seen in previous years is clearly evident again in this survey. At one end of the spectrum, four respondents supported management in 75 per 1. RCM UK was acquired by Allianz Capital in 2013; Cazenove Capital Management was acquired by Schroders in 2013; the Co-operative cent or more resolutions, while at the other end six Asset Management was acquired by Royal London in 2013; Ignis investors supported management in 30 per cent or Asset Management was acquired by Standard Life in 2014; and F&C less resolutions. On remuneration, two respondents Asset Management was acquired by BMO Financial Group in 2014. In 2015, Threadneedle Asset Management rebranded as Columbia supported 80 per cent or more remuneration reports Threadneedle Investments EMEA and Ecclesiastical Investment while three respondents did not support any; and Management rebranded as EdenTree Investment Management. 02 | TUC FUND MANAGER VOTING SURVEY 2015 INTRODUCTION votes. A list of the 61 resolutions on which voting and Of the two voting agencies asked for voting engagement data was sought can be found in Section recommendations PIRC Ltd provided a full response. One of this report. A new respondent this year is Trade Union Share The second section of the survey featured a set Owners (TUSO), a collaborative initiative that launched of questions about the policies and practices of in 2013. TUSO brings together funds of trade unions — institutional investors. The questions and summary of both pension funds and general funds — to collaborate responses can be found in Section Two of this report. on voting at company AGMs and company engagement Responses to this part of the survey are anonymised. in line with trade union values. TUSO funds vote according to the Trade Union Voting and Engagement Guidelines, available on the TUC website. Process A total of 16 organisations failed to respond or declined The voting survey and a covering letter were sent out to take part in the survey. A list of the organizations to the target group in July with a deadline of the 4th surveyed and the nature of their responses can be September for responses. Follow up emails and calls found in the Appendix. were made to encourage responses. Reading the results The Respondents As we continue to stress, trustees should be aware A total of 22 fund managers provided responses that there is not always a ‘right’ way to vote on issues to the survey including voting data. They were: covered in the section on voting records. Investors may Aberdeen Asset Management; Aviva Investors; be able to give a reasonable justification for voting in AXA Investment Managers; Baillie Gifford; Baring favour of a controversial item where an abstention or Asset Management; BMO Global Asset Management; a vote against may have seemed to some to be more CCLA; Columbia Threadneedle Investments EMEA; appropriate. Votes in favour of management proposals EdenTree Investment Management; Fidelity should not necessarily be seen as a failure to engage Worldwide Investment; Henderson Global Investors; properly with investee companies and raise legitimate Hermes Equity Ownership Services; JP Morgan Asset concerns with incumbent management. Management; Jupiter Asset Management; Kames Capital; Legal & General Investment Management; That said, the TUC believes that over a range of Newton Investment Management; Royal London Asset issues significant differences emerge between fund Management; Sarasin & Partners LLP; Schroders; managers their approach to exercising voting rights. Standard Life Investments; and State Street Global The information provided in the survey suggests that Advisors. there is indeed a wide range of stances taken by fund managers. These respondents represent a substantial section of UK fund managers. The TUC believes that by disclosing We hope the information provided will improve the voting decisions these managers have set a standard information available to trustees to make informed for others. We welcome the commitment of these views on fund managers’ relationships with investee managers to transparency and hope trustees also companies. recognise the willingness of these managers to be open and accountable. We have included information on engagement activity on the voting items covered in the survey. Of the 29 In addition Goldman Sachs Asset Management provided respondents who provided voting data, 19 included a response to Section Two of the questionnaire only. information on engagement activity in relation to those items, compared with 14 of the 26 respondents who The TUC has again this year also received information provided voting data included information in 2013. from some of the larger pension funds: the British Airways Pensions Investment Management, the Environment Agency Pension Fund, RPMI Railpen Investments and the Universities Superannuation Scheme. We are very grateful to those funds which responded to the survey. TUC FUND MANAGER VOTING SURVEY 2015 | 03 SECTION ONE | VOTING AND ENGAGEMENT RECORDS Section One: Voting and engagement records Section One of the survey asked respondents how they voted on items and engaged at company meetings in 2014 listed below. Individual organisation’s voting data are listed on pages 06—63. Company name Date Type Resolution (number) Ashtead Group 3/9 AGM Approve the Remuneration Report (2) AstraZeneca 24/4 AGM Elect Jean-Philippe Courtois (5h) Approve the Remuneration Report (6) Barclays 24/4 AGM To approve a fixed to variable remuneration ratio of 1:2 for Remuneration Code Staff (4) Betfair Group 4/9 AGM Approve the Remuneration Report (3) BG Group 15/5 AGM Approve the Remuneration Report (3) BHP Billiton Group (GBR) 23/10 AGM To elect Ian Dunlop (25) Burberry Group 11/7 AGM Approve the Remuneration Report (3) Bwin.