12. Annual Presentation by Glass Lewis & Co. LLC - Proxy Service Provider

Transcription

1 12. Annual Presentation by Glass Lewis & Co. LLC - Proxy Service Provider 12

2 PRESENTATION TO LOS ANGELES DEPARTMENT OF WATER & POWER PROXY RESEARCH & VOTING SERVICES December 9, 2015

3 Agenda I. Glass Lewis Overview II. III. IV. Summary of Services Provided 1. Proxy Research Proxy Paper 2. Vote Agency Services ViewPoint 3. Custom Policy Review Voting Statistics and Reports 2015 Proxy Season Review 1. Shareholder Activism 2. Say on Pay 3. Proxy Access 4. Environmental and Social (E&S) Shareholder Proposals 5. New Compensation Regulations 2

4 Agenda V Proxy Season Preview VI. Why Continue to Partner with Glass Lewis? VII. Q & A 3

5 I. GLASS LEWIS OVERVIEW

6 Company Profile The leading independent provider of global governance services, helping institutional investors understand and connect with the companies they invest in. Glass Lewis offers a complete suite of governance-related services: Proxy Paper In-depth research on 20,000+ company meetings every year ViewPoint Leading-edge proxy vote management platform Right Claim Class action settlement recovery service Environmental & Social Complete spectrum of E&S data, monitoring, and screening tools Meetyl The leading global web-based platform for corporate access Glass Lewis is a portfolio company of the Ontario Teachers Pension Plan Board (80%) and Alberta Investment Management Corp. (20%) 5

7 Current Snapshot Clients 1,200+ globally, representing over $20 trillion in AUM Employees 350+ employees, more than half of whom are dedicated to research Locations Full-service offices in San Francisco; New York; Sydney, Australia; Limerick, Ireland; and Karlsruhe, Germany Equilar Partnership Exclusive use of Equilar s peer networking algorithm in Glass Lewis US and Canadian research and Pay-for-Performance model Subsidiaries Glass Lewis Europe, IVOX Glass Lewis, CGI Glass Lewis, Washington Analysis, Meetyl 6

8 Ownership Organization Chart Ontario Teachers' Pension Plan Board (OTPP) 80% Alberta Investment Management Corporation (AIMCo) 20% GLC Holding Co., LLC 100% Glass, Lewis & Co., LLC 100% CGI Glass Lewis, Pty. Ltd. (Australia) 100% Glass Lewis Europe, Ltd. (Ireland) 100% Meeyl, LLC 100% Washington Analysis, LLC 100% IVOX GmbH (Germany) 100% Meetyl Europe, Ltd. (Ireland) 100% Swiss Representative Office 7

9 Significant Milestones 2003 Founded in San Francisco Launched to address need for independent, contextual, economic-based research 2007 Acquired by Ontario Teachers Pension Plan 2008 Opened New York office Acquired Washington Analysis 2014 Acquired Meetyl 2015 Acquired IVOX Proxy Voting Platform Viewpoint launched Acquisition of Sydney-based Corporate Governance International Alberta Investment Corp. acquires 20% stake in Glass Lewis Established Europe-based research team in Ireland Entered partnership with Equilar 8

10 II. SUMMARY OF SERVICES PROVIDED

11 1. Proxy Research Proxy Paper Proxy Paper Guaranteed global coverage; complete report for all companies More than 20,000 meetings across 100 markets Independent and contextual analysis with a focus on economic impact Equilar market peers in P4P model for US and Canada Direct access to research team Board presentations, white papers, Proxy Talks, data feeds Issuer Engagement Policy: Designed to empower clients and investors 10

12 Proxy Research Process Team Approach Analysis varies based upon market, issue, complexity and company size All reports reviewed by two or more people; varies by report profile Accuracy and lead times are monitored to ensure client satisfaction Executive Compensation Analyze executive compensation quantitatively and qualitatively Exclusive rights to incorporate Equilar market-based peers in P4P model Incorporate multiple performance factors into P4P analysis Mergers & Acquisitions / Proxy Contests Specialized team and experience Proposed offers are evaluated versus the returns to shareholders Approach to proxy contests aligns well with most institutional investors Environmental, Social and Governance (ES&G) / Shareholder Proposals Analyze effect E&S issues have on shareholder value Balanced approach, laying out both the company and proponent perspectives Value add beyond proxy season; white papers, data, bespoke research Proactive alerts for anti-social proposals 11

13 2. Vote Agency Services Viewpoint Proven, reliable technology Flexible, configurable userinterface Customizable access & permissioning Sophisticated custom policy implementation Myriad reporting options Transparent & compliant: audits, reconciliation, activity logs Round-the-clock customer service and support Secure and Reliable: 99.9% uptime; zero data breaches 12

14 Vote Agency Services Service Level Flexible service model and configurable technology supports tailored client workflow Dedicated client service rep with limited client load; less than 10 clients per CSR Service culture built on integrity and accountability, and rewarding responsiveness North American, European, and Asia-Pacific offices provide support for client s global offices, as well as nearly 24/7 backup support for urgent operational requests Technology and Operations Modern platform architecture supports sophisticated and evolving workflow Continued investment and agile development process ensures rapid innovation Client-centric product development and software update processes Unrivaled 10 year track record of reliability, security, and performance Compliance Multi-faceted account and ballot reconciliation process Complete and reportable logging of user activities GL business model minimizes risk to clients Proactive, transparent disclosure of potential conflicts which cannot be eliminated (e.g., research on a public investment company which is also a client) 13

15 3. Custom Policy Review Work with LADWP to update policy guidelines on proxy issues, codes and new rulings regarding corporate governance, business-related and social-related items, and compensation. Provide recommendations and suggestions on what to vote. 14

16 III. VOTING STATISTICS AND REPORTS

17 Voting Statistics for LADWP December 1, 2014 to October 31, 2015 Total number of meetings: 1,039 Number of US: 621 Number of non-us: 418 Total number of ballots cast: Number of US: 2,635 Number of non-us: 993 Total number of proposals: 12,671 Number of Management Proposals: 12,102 Number of Shareholder Proposals:

18 Proxy Voting Report Example 1 Alibaba Group Holding Ltd Voted Ballot Status Confirmed Decision Status Approved Ballot Created 09/11/2015 Ballot Voted 09/29/2015 Vote Deadline Date 10/02/2015 Record Date 08/13/2015 Ticker BABA Share Blocking No Contested No Agenda Type Mgmt Country Of Origin KY Country Of Trade US Ballot Sec ID CUSIP W102 Annual Meeting Agenda (10/08/2015) Mgmt Rec GL Rec LADWP Policy Vote Cast 1 Elect Joseph C. Tsai For Against For For 2 Elect Jonathan LU Zhaoxi For Against For For 3 Elect J. Michael Evans For Against For For 4 Elect Börje E. Ekholm For For For For 5 Elect Wan Ling Martello For For For For 6 Appointment of Auditor and Authority to Set Fees For For For For Accounts With Shares Shares Voted Holdings Id Shares Held Shares On Loan Policy Id Voting Group Northern Trust Company- DWPH- Vontobel EM Northern Trust Company- DWPR- Vontobel EM Totals 3,220 DWP12 8,968 6,372 LADWP Policy LOS287 VG1 48,649 DWP03 53,024 8,012 LADWP Policy LOS287 VG1 51,869 61,992 14,384 17

19 Proxy Voting Report Example 2 Altera Corp. Voted Ballot Status Confirmed Decision Status Approved Ballot Created 08/26/2015 Ballot Voted 10/02/2015 Vote Deadline Date 10/05/2015 Record Date 08/12/2015 Ticker ALTR Share Blocking No Contested No Agenda Type Mgmt Country Of Origin US Country Of Trade US Ballot Sec ID CUSIP Special Meeting Agenda (10/06/2015) Mgmt Rec GL Rec LADWP Policy Vote Cast 1 Merger/Acquisition For For For For 2 Right to Adjourn Meeting For For For For 3 Advisory Vote on Golden Parachutes For For For For Accounts With Shares Shares Voted Holdings Id Shares Held Shares On Loan Policy Id Voting Group Northern Trust Company- DWPH- Gateway Active Northern Trust Company- DWPH- Gateway Pass Northern Trust Company- DWPR- Gateway Active Northern Trust Company- DWPR- Gateway Pass Totals LADWP Policy LOS287 VG LADWP Policy LOS287 VG1 4, ,606 0 LADWP Policy LOS287 VG1 4, ,610 0 LADWP Policy LOS287 VG1 10,968 10,

20 Analyze Voting Activity (AVA) Report Voting Summary For LADWP Meeting Statistics Report LADWP AVA 12/01/ /31/2015 From 12/1/2014 to 10/31/2015 Region Country Of Origin Voted Total for all Regions 1022 Africa 2 Asia ex-japan 57 Canada & United States 669 Europe 145 Japan 89 Latin America & Caribbean 39 MENA 1 Oceania 20 Unvoted Mixed Take No Action Total

21 Analyze Voting Activity (AVA) Report Proposal Statistics Report For LADWP Proposal Statistics Report LADWP AVA 12/01/ /31/2015 From 12/1/2014 to 10/31/2015 Mgmt Proposals SHP Proposals Total Proposals For Against Abstain Year Years Years Mixed Take No Action Unvoted Totals Mgmt Proposals SHP Proposals Total Proposals With Management Against Management N/A Mixed Take No Action Unvoted Totals

22 IV PROXY SEASON REVIEW

23 2015 Proxy Season Review: 1. Shareholder Activism Activist settling/withdrawing Mondelez added Trian head Peltz Pepsi added Trian nominee Johnson Icahn won governance concessions at Gannett Dupont Win for company over Trian nominees Wynn Voting agreement 22

24 2015 Proxy Season Review: 2. Say on Pay 60 companies lost vote (~2%) 72 companies lost in 2014, 81 in 2013, 65 in 2012; 45 in 2011 (Equilar) Smaller companies more likely to have vote against than in prior years Lowest support: 14% at Nuance Communications Tutor Perini lost for fifth consecutive year ~90% average support Similar to prior years Resource and commodity companies Heightened scrutiny Tough decision: maintain compensation program or adjust to new reality 23

25 2015 Proxy Season Review: 3. Proxy Access In 2015, about 100 companies had shareholder proposals seeking a proxy access right 75 from New York City s pension funds: 3%/3 years/25% Others similar in approach with additional terms, eg list nominees alphabetically along with board nominees (Apple) Whole Foods response and SEC decisions clouded approach Adopt Proxy Access (GE, Prudential, CF Industries) Similar to SEC proposed rule GE: 3%/3 year/20%/20 shareholders Director & Employee Hedging-Proposed Allow Vote on Shareholder Proposal Oppose it Support it (Citigroup, Apache) Dueling Proposals (AES, Exelon) Exclude Shareholder Proposal in Favor of Management (First Merit) 24

26 2015 Proxy Season Review: 4. Environmental & Social Shareholder Proposals Political contributions/lobbying Highest number overall Environmental proposals Sustainability report Climate change related (supported by management at BP/Shell) Carbon asset/stranded asset: dividends (Chevron) and cap ex reporting (Chesapeake Energy) Composition of the board and director qualifications Boards consider women and minorities when considering new board candidates (no recommendation at LinkedIn) Companies add a director with environmental expertise 25

27 2015 Proxy Season Review Shareholder Proposals By Category 13.7% Governance 14.7% 52.3% Social Compensation Environmental 19.3% 26

28 2015 Proxy Season Review: 5. New Compensation Regulations Internal Pay Equity (Pay Ratio)-Final Disclosure of the median of annual compensation for employees (excluding the CEO), the CEO s compensation, and the ratio between the two; expected in 2018 proxy Pay vs. Performance-Proposed Executive compensation actually paid to the CEO (average of NEOs) Clawback Policies-Proposed Incentive-based compensation paid for 3 years preceding a restatement due to material non-compliance with financial reporting requirements, if the compensation is based on incorrect data even mistakes Director & Employee Hedging-Proposed Whether directors, officers and other employees are permitted to hedge or offset any decrease in the market value of equity securities granted by the company as compensation 27

29 V PROXY SEASON PREVIEW

30 2016 Proxy Season Preview Reaction to Proxy Access Proposals Shareholder Activism: More settlements? Acceleration of Equity Vesting Board Refreshment Tenure Diversity 29

31 VII. WHY CONTINUE TO PARTNER WITH GLASS LEWIS?

32 Why Continue to Partner with Glass Lewis? PEOPLE Corporate culture built on service, integrity, and accountability PRODUCTS Modern technology supports rapidly evolving client needs CLIENT SERVICE Tailored, proactive support; workflow refined over years INNOVATION Leading edge products; unparalleled development roadmap OWNERSHIP Institutional investors; knowledgeable, supportive, long-term INDEPENDENCE Uncompromising business model empowers clients GLASS LEWIS DNA Corporate governance is our core business and sole focus, and our clients are the center of everything we do 31

33 VII. Q & A