AGM Season 2017: The Trends & What They Tell Us About Shareholder Expectations & Remuneration

Transcription

1 AGM Season 2017: The Trends & What They Tell Us About Shareholder Expectations & Remuneration Ingo Speich Head of Sustainability & Engagement and Senior Portfolio Manager, Union Investment Matthias Nau Senior Account Manager, Georgeson Daniele Vitale Corporate Governance Manager, Georgeson

2 Introduction to Georgeson Founded in 1935 and acquired by Computershare in Global offices in all major financial jurisdictions 15 Full time employees in London, with law, investment banking and corporate governance backgrounds Georgeson Northern European team has 120 years of experience combined 70 listed Clients in the UK, the Netherlands, France, Germany, Switzerland and more We advise on 140+ transactions a year Annual General Meetings, M&A and Shareholder Activism campaigns

3 Georgeson Global Offices

4 Engaging with the four key stakeholders Asset Managers Pension funds Sovereign Wealth Funds Focus on Proxy Voting and Corporate Governance Analysis: Non-voting shareholders Opposing shareholders at past meetings Institutional Investors Proxy Advisors ISS Glass Lewis Local Proxy Advisors Directors holdings Employee Trusts Retail holders held via banks/brokers Retail & Employee/ Director Professional Engagement Firms Hermes EOS BMO REO (ex-f&c) Robeco SAM GES (ex-g40)

5 Active Ownership vs. Shareholder Activism Active Ownership Proxy voting and the exercise of other formal shareholder rights Engagement activities (interactions held by institutional investors with investee companies) Objective Exercising stewardship over the assets in an investor s portfolio Shareholder Activism Submitting a shareholder resolution Calling an Extraordinary General Meeting Campaigning to encourage other shareholders to vote a certain way Formal complaints to a regulator Lawsuits Objective Leveraging change to unlock economic upside for shareholders

6 The passive investor and their increasing clout Glenn Booraem Investment Stewardship Officer Vanguard We re riding in a car we can t get out of governance is the seat belt and air bag. * *SOURCE: Meet the New Corporate Power Brokers: Passive Investors published in Wall Street Journal (24 October 2016)

7 Institutional Investors How CG teams work Meetings 17,316 Proposals 163,499 Engagements 1,274

8 Quorum (%) DAX and MDAX Average Quorum 75.0% DAX MDAX 70.0% 65.0% 60.0% 55.0% 50.0% 45.0% 40.0% 49.9% 68.9% 65.4% 55.1% 54.9% 68.0% 71.7% 71.5% 59.9% 60.0% 35.0%

9 Quorum (%) DAX individual quorum levels (2017 season)

10 Rejected DAX resolutions (2017 season) Approve remuneration system Rejected Proposals Allow the Company to call an EGM on a 10 day notice period

11 0.7% Number of proposals 16.7% 9.1% 2.6% 29.4% 20.0% 75.0% 5.3% 87.5% 87.5% 17.6% 37.0% 7.9% 15.2% Number of resolutions which received more than 10% against votes (DAX) Management & Supervisory Board Discharge Remuneration System Election of Supervisory Board Members Authorities to Issue Shares Approve Auditors Other The percentages represent the ratio between the number of proposals that received more than 10% against and the total number of proposals in each category.

12 0.7% 37.5% 5.9% 75.0% Number of proposals 25.3% 24.1% 28.1% Number of negative ISS recommendations Management & Supervisory Board Discharge Remuneration System Director Elections Other The percentages represent the ratio between the number of proposals that received an against recommendation from ISS and the total number of proposals in each category.

13 1.5% 33.3% 37.5% 3.3% 62.5% 7.8% 11.3% Number of proposals 23.7% 30.9% Number of negative Glass Lewis recommendations Management & Supervisory Board Discharge Remuneration System Director Elections Other The percentages represent the ratio between the number of proposals that received an against recommendation from Glass Lewis and the total number of proposals in each category.

14 Number of proposals 4.5% 77.8% 62.5% 58.8% 43.1% 23.3% 83.3% 100.0% 87.5% 81.8% 82.1% 29.5% 92.7% 32.4% 55.7% Number of negative DSW/ECGS recommendations Management & Supervisory Board Discharge Approve Auditor Authorities to Issue Shares Director Elections Remuneration System Other The percentages represent the ratio between the number of proposals that received an against recommendation from DSW and the total number of proposals in each category.

15 Key Figures From Across Europe

16 Remuneration across Europe France Italy Switzerland 205% increase in the number of contested remuneration-related proposals. 50% increase in the number of remuneration report proposals contested. Half of proposals relating to the remuneration report have been contested for the past three years. Netherlands Spain UK 17% increase in the number of contested remunerationrelated proposals. 16% increase in the number of remuneration report proposals contested. 28% decrease in the number of contested remuneration report resolutions in the UK.

17 Remuneration in Germany in % of rejected proposals in Germany were remuneration-related (3 out of 4). 88% of proposals relating to remuneration systems received over 10% against votes (7 out of 8), 38% were rejected (3 out of 8). Reasons for shareholder to vote against include: High level of discretion on variable compensation Performance targets for STIP/LTIP awards not disclosed or benchmarked against a disclosed peer group Excessive total compensation Lack of independence on the compensation committee Shareholders have started to vote against the discharge of the supervisory board if no significant improvements to contested remuneration systems have been made.

18 Proxy advisor vote recommendation on the Remuneration Reports of the FTSE 100 ISS IVIS Glass Lewis PIRC

19 OUTLOOK AGM SEASON 2018

20 Engagement at Union Investment UnionEngagement integrates Networks Voting policy Standards & best practice Sustainability Responsible Corporate Governance Partners Financial analysis NGOs economic, environmental and social aspects with the objective of actively influencing responsible corporate management.

21 Extended sustainability cover 15 AGM speeches SRI & Engagement specialists sustainability meetings votes at AGM Sustainability analysis Sectoranalyst meetings with companies ESG integration

22 UnionVote: voting by country in countries 1,543 votes Source: Union Investment.

23 Engagement trends 2018 Implementation of the CSR and shareholder rights directive Sustainability arrived at mainstream investment Increase of collaborative engagement & ESG initiatives Rise of activist investors Strong focus on environmental issues (despite or because of Trump) CO 2 -screening of portfolios ESG finds its way in executive compensation Regulation on conflict minerals

24 Major Topics AGM Season Compensation Simplification of remuneration systems Cap Reasonable disclosure Linkage of operational performance and compensation High granularity of performance targets Pension scheme Clawbacks ESG integration

25 Thank You Ingo Speich Union Investment Matthias Nau Georgeson Daniele Vitale Georgeson

26 Thank You Thank you for attending GEO s 2017 Pan European Regional Event in Berlin. We hope you enjoyed this session. If you require CPE Credit, don t forget to Sign Out Please give us your feedback on this session using the mobile app or the paper surveys available at the door