LYXOR ASSET MANAGEMENT

Transcription

1 2017 LYXOR ASSET MANAGEMENT Proxy Voting Report Year 2017

2 Voting Report Governance and Voting Principles LYXOR Asset Management SAS (hereafter referred to as LYXOR ) is a fully-owned subsidiary of Societe Generale Group. This document outlines how LYXOR, on behalf of its clients, exercises the rights attached to the equity in which their funds are invested. LYXOR is a signatory to the UN Principles of Responsible Investment (PRI) and is committed to exercise its voting rights with the aim of promoting good corporate governance for the benefit of its clients and other shareholders. Furthermore, LYXOR has filled its reporting obligation to the PRI by indicating its responsible investment practices. LYXOR voting policy is included within the context of its policy for Socially Responsible Investments (SRI). In accordance with article of the Autorité des Marchés Financiers ( AMF ) General Regulations, this document outlines how LYXOR, on behalf of its clients, exercises the voting rights. This report covers the 2017 period. Voting Principles LYXOR has developed in its voting right policy, principles which are the basis of an effective and efficient governance. Good corporate governance should in the long term result in the enhancement of corporate performance and therefore of shareholder value. In exercising its voting rights LYXOR can contribute to the improvement of economic and financial performance in the companies in which LYXOR invests on behalf of its clients, with the aim of driving best practice and reducing the risk of corporate default. The key areas of good corporate governance for LYXOR are the following: Protection of the long term interests and rights of shareholders, supporting the one share, one vote principle, where shareholders have voting rights in direct proportion to their economic interest in a company. Independence and diversity of boards to avoid conflicts of interests and to foster optimal effectiveness and efficiency of boards. Fair and transparent executive remuneration in line with the company s performance. Quality and integrity of financial information and related communication to shareholders. Integration of environmental and social responsibility in the company s operations for the benefit of the company itself, its shareholders as well as external ones. The LYXOR voting policy is available on the company website: 2

3 2- Organization of the voting rights and implementation of LYXOR voting policy Organization of the voting rights The organization of the "voting rights as well as the coordination of the votes is ensured by the SRI team, which is in charge of the development and application of the LYXOR s SRI policy. The SRI team is integrated into the General Secretariat, directly linked to the New Products and Governance sub-division responsible for analyzing and addressing all Risk and SRI topics. A governance committee oversees the implementation of LYXOR s Voting Policy. The committee is composed of the following members: - Chief Investment Officer (CIO) - General Secretary - Head of Legal Affairs - Chief Compliance Officer (RCCI) - Head of Risk New Products & Head of SRI - SRI Analyst Voting Process LYXOR uses the services of an external provider for implementing its Voting Policy. This expert provides recommendations (voting directions) for the resolutions on which LYXOR votes, based on LYXOR s Voting Policy. The final decision of voting is always made by LYXOR based on its voting policy. LYXOR currently uses the services of ISS (Institutional Shareholder Services) for the implementation of its voting policy. Where electronic voting is possible, the vote is cast through a Proxy Exchange Platform. In exceptional cases where electronic voting is not possible (notably for some French companies) proxy voting forms are filled out and sent to the relevant issuers by post. The formalization of voting decisions takes into account global corporate governance standards and local governance regulations as well as codes of the different countries. 3

4 3- Voting record to General Meetings Context and voting scope In 2017, LYXOR revised its voting policy. LYXOR exercise now its voting rights for the following funds under its management: French Funds (Fonds Communs de Placement FCP)*, French and Luxembourg SICAV limited to French securities and securities belonging to the MSCI Europe index. Issuers selection criteria: to prevent excessive cost resulting by the voting process, LYXOR votes only where its consolidated holdings represent at least 0.10% of the company s equity capital. * Except the vehicles using a method of synthetic replication which are designed to track a financial exposure through a performance swap. Therefore, the returns of the vehicles do not depend on the return on the shares held by these funds. All dividends and profits are swapped with a market counterparty. The scope of the funds in 2017, included 2 funds, covered 54 companies and 59 General Meetings. In 2017, LYXOR exercised its right to vote in 59 European General Meetings, including 27 in France and 32 out of France. The voting rights were exercised by correspondence or via Proxy Exchange Platform. - Participation rate to General Meetings 59/ 131* - Limited rate to the voting scope chosen by LYXOR: 59/ 59 * Number of General Meetings held by LYXOR's portfolio companies on voting funds General meetings voted in 2017 Country breakdown 4

5 Voting breakdown Votes For % Votes Against % Abstentions 000 Total number of voted resolutions % Including: Resolutions not approved by the management vote for 0 0 Resolutions not approved by the management vote against 2 Voting rational breakdown by type * to approve financial statements, dividend, to elect auditors 5

6 Analysis of main areas of opposition In 2017, the main areas of opposition for LYXOR focused on specific resolutions such as: Executive remuneration policy and practices, Boards composition and remuneration, Share capital operations and anti-takeover measures. LYXOR's oppositions breakdown by category A. Executive remuneration policy and practices Remuneration issues of company executives have been the main issue of this voting year as the result of the French law SAPIN 2, which introduces two annual voting on the company s remuneration policy and the approval of remuneration s variable elements. The reasons for these oppositions include: lack of transparency in some elements of remuneration (variable components are too important relatively to the fixed remuneration, performance conditions and objectives to be achieved are considered to be irrelevant). In addition, remuneration whether upwards or downwards, must be consistent with average earnings and company s performance. Since January 2017, LYXOR have voted 54 times against these proposals regarding the subjects of Executive remuneration. This figure represents 36% of the total contentious issues revolved around this theme. B. Board composition There are still many criticisms regarding the composition of the boards of directors / supervisory boards. The main reasons of opposition concern in particular: The Combination of Chairman & CEO roles, A low Level of Independence on the overall board structure / Specify Committee, An excessive number of significant positions held by some directors, An Insufficient attendance and participation in the Boards activities. 6

7 Since January 2017, LYXOR voted 57 times against these proposals regarding the subjects of Boards Compensation. This figure represents 38% of the total contentious issues revolved around this theme. C. Share capital operations and anti-takeover measures These anti-takeover measures include special rights of appointment, share repurchase, approval of an issuance of equity during a takeover bid, voting ceilings and all other forms of poison pill (type of financial, legal, accounting and regulatory defensive tactics used by a company's board of directors against a takeover) in effect in some markets. These measures result generally in an excessive dilution of capital for the existing shareholders which discourage public offers that could have benefited them. The share capital operations mainly concern authorizations to increase the capital whose amounts proposed would lead, according to LYXOR, to an excessive dilution of capital for existing shareholders or whose conditions of implementation do not seem satisfactory to existing shareholders (deletion of the preferential right to subscription for example). Since January 2017, LYXOR voted 25 times against these proposals regarding the subjects of share capital operations and anti-takeover measures. This figure represents 17% of the total contentious issues revolved around this theme. In 2017, LYXOR voted at least against one resolution in 28 General Meetings, i.e 47% of the General Meetings voted. Company Anheuser-Busch InBev SA General Meeting date Detail of General Meetings concerned Number of Against Company General Meeting date Number of Against 26/04/ Orange 01/06/ Atos SE 24/05/ Pernod Ricard 09/11/ Axa 26/04/ Peugeot SA 10/05/ Carrefour 15/06/ Publicis Groupe 31/05/ Credit Agricole SA 24/05/ Renault 15/06/ Danone 27/04/ Repsol SA 18/05/ Eiffage 19/04/ SAP SE 10/05/ Engie 12/05/ Schneider Electric SE 25/04/ Eni S.p.A. 13/04/ STMicroelectronics NV 20/06/ Gas Natural SDG S.A 20/04/ Telefonica S.A. 08/06/ Groupe Bruxelles Lambert 25/04/ Total SA 26/05/ Kering 27/04/ Valeo 23/05/ L Air Liquide 03/05/ Veolia Environnement 20/04/ LVMH Moet Hennessy Louis Vuitton 13/04/ Vivendi 25/04/

8 LYXOR's oppositions breakdown by country External resolutions External resolutions are votes that have not been presented by the Governance bodies (board of directors or executive board). Although still rare, these resolutions are increasing and witness a greater engagement of shareholder in corporate governance issues. Shareholders resolutions submitted to LYXOR's vote this year focused mainly on governance issues, including in relation to directors and appointments in the boards of directors. Dialogue with companies The voting rights exercise is an opportunity for LYXOR to interact with companies in which we invest around governance issues. This year, LYXOR was contacted by several issuers who provided us with additional information. This dialogue allowed us to receive the company's point of view and clarify some points however this did not affect our vote. Votes not conforming to LYXOR Voting Policy Principles LYXOR did not detect any conflict of interest with its voting policy principles. Conflicts of Interest management LYXOR did not detect any conflict of interest in the context of the application of its voting policy. 8

9 LYXOR Asset Management Tours Société Générale 17 Cours Valmy La Défense Cedex France - solutions@lyxor.com LYXOR Asset Management (LYXOR AM) is a French société par actions simplifiée (simpled private limited company) with a capital stock of 161,106,300 euros Nanterre Trade Register n LYXOR AM is an investment managment compagny autorized by the Autorité des marchés financiers under the UCITS Directive (2009/65/EC) and the AIFMDirective (2011/31/EU). Copyright February 2016 LYXOR AM. All rights reserved. 9