THE IMPORTANCE OF BEING AN ACTIVE SHAREHOLDER

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Edgar Tucker
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1 Perpetual Investments THE IMPORTANCE OF BEING AN ACTIVE SHAREHOLDER Nathan Parkin Portfolio Manager September 2014

2 AGENDA What does it mean to be an active shareholder? Why be an active shareholder? How is Perpetual an active shareholder?

3 BEING AN ACTIVE SHAREHOLDER WHAT An active shareholder is one that uses their rights as an owner to influence or encourage change in corporate behaviours WHY To maximise shareholder value for our clients and ultimately your members To achieve better investment outcomes over the long term HOW We value our voting rights and vote judiciously We will engage with company s management and/or Board directly where necessary to address issues and encourage and promote change where issues exist We will pursue other strategies if necessary meeting with company advisers, other independent directors, active public campaign

4 SPECTRUM OF BEING AN ACTIVE SHAREHOLDER BY PRIORITY Activist/ Greenmailers / Agitators FINANCIAL GAIN Active Institutional Shareholder Small Shareholder Associations GOVERNANCE/ TIME HORIZON Governance Associations/ Legislators

5 ROADBLOCKS TO BEING AN ACTIVE SHAREHOLDER Boards compelled to do their best for all shareholders Free riders Investor short-termism and box-ticking Risk of litigation Board/management hubris Passive, disengaged, compliant shareholders Reputational risk of becoming too active Activism stigma $ Not enough resources -

6 WHAT S IMPORTANT? Quality matters and performance is king.

PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING CODE OF CONDUCT The company is committed to ensuring directors and personnel maintain a high level of ethical conduct.

7 PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING CODE OF CONDUCT The company is committed to ensuring directors and personnel maintain a high level of ethical conduct. Directors and employees are required to conduct all business in accordance with all applicable laws and regulations, governance policies and procedures to safeguard the Company s reputation whilst promoting shareholder and market confidence. All directors, managers and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the consolidated entity. Every employee has a nominated supervisor to whom they may refer any issues arising from their employment.

8 WHAT CREATES OUTCOMES? An expectation of engagement helps create outcomes.

9 HOW TO GAIN TRUST * Proactive * Open * and honest dialogue = TRUST

10 IN SUMMARY Clear priority on performance Open and honest relationships and a thorough understanding of issues builds credibility Reputation for having a view and taking action helps

11 IMPORTANT NOTE This presentation has been prepared by Perpetual Investment Management ABN , an Australian Financial Services Licensee, Licence Number , a subsidiary of Perpetual Trustees Australia. While Perpetual strives to provide accurate information, this presentation should not be treated as a comprehensive statement of any law or practice. This presentation is not intended to provide you with personal advice and in providing this information, we have not taken into account your particular investment objectives, financial situation or needs. You should assess whether this information is appropriate for your particular needs, either by yourself or with your adviser. Perpetual expressly disclaims any responsibility or liability to anyone who acts or relies upon anything contained in, or omitted from, this presentation. Total returns shown in the presentation/slides have been calculated using gross performance and assuming reinvestment of distributions. No allowance has been made for taxation. Past performance is not indicative of future performance. The offer to invest in any fund is made in a copy of the current Product Disclosure Document for the relevant fund. Anyone wishing to invest in the funds will need to complete the application for the relevant fund.

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