Proxy Voting Policy Prepared September 2017
Version: 3.0 Issuing details: Prepared by: Executive Manager Investments Approved by: Board of Directors, CARE Super Pty Ltd Date of Approval: 19 September 2017 DOCUMENT CONTROL SUMMARY OF CHANGES Issue Date Change of desciption Version 1 draft March 2014 Initial draft by Greg Nolan using existing policy wording from Responsible Investing Policy. Version 1 draft 7 April 2014 Review by IRC and recommendation to Board. Version 1 6 May 2014 Board approval. Version 2 - draft 30 March 2015 Review by IRC and recommendation to Board. Version 2 6 May 2015 Board approval. Version 3 14 August 2017 IC Review Version 3 19 September 2017 Board approval. This document supersedes and replaces any previous issue. Copyright CARE Super Pty Ltd. All rights reserved. No part of this publication may be reprinted, reproduced, stored in a retrieval system or transmitted, in any form or by any means, without the prior permission in writing from the owner. 2
Contents 1. Introduction... 4 2. Principles of Engagement... 4 3. Proxy Voting... 5 4. Securities Lending... 6 5. Engagement... 6 6. Shareholder litigation... 6 7. Transparency & disclosure... 6 8. Review... 6 3
1. Introduction CARE Super Pty Ltd is the Trustee (the Trustee) of CareSuper (the Fund), which provides superannuation benefits and services in accordance with the Trust Deed dated 1 January 1987. This policy outlines the Proxy Voting Policy of the Fund. The Fund adopts an active approach to corporate governance, recognising its rights and responsibilities as a long-term shareholder. As a fiduciary acting on behalf of its members, the Fund recognises that dialogue with companies and other market participants may assist in ensuring alignment between the management of those companies and the interests of CareSuper members for the purpose of maximising long-term riskadjusted returns. As a signatory to the Principles for Responsible Investment (PRI), the Fund is committed to Principle 2 which addresses active ownership through voting rights and engagement capability. This policy outlines the approach of the Fund to satisfy this commitment. 2. Principles which direct Proxy Voting and Company Engagement The broad principles that underline the Fund s voting and engagement policy are: i. As a fiduciary, our primary purpose is to maximise risk adjusted returns to our members. ii. A share represents an ownership claim of a company and should carry with it voting rights. iii. Intelligent voting is aided by ongoing dialogue with companies by CareSuper or its appointed agent. iv. Boards and Management of listed companies should act as agents on behalf of shareholders. v. The right of shareholders to vote is an essential part of a well-functioning corporate governance system. The Fund s voting decisions are primarily based on investment considerations and principles of good corporate governance. CareSuper seeks to vote either directly or via its appointed agents, at all meetings and on all resolutions in relation to companies in which the Fund has an equity interest, or any other interest which entitles the Fund to vote on corporate resolutions. To protect and enhance long term value, and reduce any potential risk to CareSuper s investments, the Fund (or its agents) engages with investee companies on a variety of environmental, social, corporate governance (ESG) and strategic issues. To raise standards across the whole market, CareSuper (or its agents) also engages with policymakers, regulators and governments to encourage them to address market failures and introduce new policies (and policy direction) to improve the functioning of the capital markets. In accordance with Principle v. above, and to ensure the Fund exercises its voting rights appropriately, the Fund directs and monitors voting at shareholder meetings as described below. AUSTRALIAN SHARES With regard to Australian shares, CareSuper, or its appointed representative, votes on all company resolutions. The Fund seeks guidance from its appointed investment managers and other parties to assist in executing the Principles described above. Proxy Voting Policy Version 3 4
The process for making a voting decision varies depending on whether a vote is on a financial resolution 1 or a non-financial resolution (those that relate primarily to ESG issues). The process may also vary depending on a company s position in the S&P/ASX Indices. The Fund subscribes to the Australian Council of Superannuation Investors (ACSI) Voting Alert Service and has, in principle, resolved to vote in accordance with the guidelines of this service on all non-financial resolutions for companies where ACSI provides recommendations. The Fund reserves the right to vary any vote from that recommended by ACSI. On financial issues, the Fund seeks guidance from its appointed investment manager(s). Each investment manager is expected to vote resolutions at its discretion, but in accordance with its policy as outlined to CareSuper and consistent with the CareSuper voting principles. Each investment manager is to inform the Fund of its intended position prior to casting its vote. The Fund reserves the right to vary any vote from that of an investment manager on financial issues. When appointing an investment manager, the Investment Committee (IC) gives consideration to the voting policy and practices of the investment manager to ensure consistency with the CareSuper Policy. Only those investment managers that demonstrate such consistency are appointed by the IC. A copy of each investment manager s voting policy is obtained at appointment. Investment managers are required to inform Management of any changes to the policy for the consideration of the Fund and to subsequently provide the final revised copy of the voting policy to the Fund. The review of voting policies and procedures is part of the monitoring and review program for each investment manager. Voting is monitored by Management and reported to the IC. OVERSEAS SHARES This policy recognises that some investments in the Overseas Shares asset class are held in pooled trust vehicles. Pooled vehicles are discussed at Section 3. In the case of individually managed accounts 2, investment managers are expected to vote all company resolutions in line with the manager s proxy voting policy. The Fund reserves the right to vary any voting decisions of an investment manager that manages an individually managed account. When appointing an investment manager, the IC gives consideration to the voting policy and practices of the manager to ensure consistency with the CareSuper policy. Only those managers that demonstrate such consistency are appointed by the IC. A copy of each investment manager s voting policy is obtained at appointment. Investment managers are required to inform Management of any changes to the policy for the consideration of the Fund and to subsequently provide the final copy of the voting policy to the Fund. The review of voting policies and procedures is part of the monitoring and review program for each investment manager. 3. Pooled Vehicles It is recognised that the Fund does not have the opportunity to exercise voting rights for shares or other securities held in pooled investments. In such cases the Fund encourages the relevant investment manager to exercise voting in accordance with the manager s voting policy. 1 Resolutions are typically termed financial or non-financial when categorised by companies for voting. Financial resolutions may be for example those relating to balance sheet items or dividend policy. The description of ESG related matters (such as director elections) as nondescription of ESG related matters (such as director elections) as non-financial is a matter of categorisation and is not to imply that ESG matters do not have a financial impact. CareSuper considers that ESG related issues can and do directly influence the financial performance and value of companies and investments. 2 Individually managed accounts are where shares are held directly by the Fund. 5
With regard to overseas shares, it is recognised that several investments are held via pooled trusts. This restricts the ability of the Fund to influence the voting decisions of the manager. However, the Fund expects managers of pooled trusts to vote on all company resolutions in accordance with their policy. 4. Securities Lending CareSuper participates in a securities lending program for company shares held in its Australian and overseas share portfolio. The Fund aims to recall all shares from third parties to enable voting of company resolutions however in some rare circumstances shares may not be able to be recalled in time for voting. The securities lending program only applies to individually managed accounts. 5. Engagement CareSuper believes in the value that active dialogue with investee companies, regulators and other market participants can bring to an investment outcome. To this end, the Fund supports ACSI in any engagement activities undertaken with either Australian or global companies. The Fund also reserves the right to retain an external service provider to advise and act on its behalf on any issue considered to have the potential to impede the long-term value of a company. In all cases, Management seeks regular reporting from any third party engaged to undertake dialogue with a company so that progress can be assessed and reported to the Fund. 6. Shareholder litigation Generally, CareSuper will not file individual lawsuits on behalf of its members against corporations for alleged violation of securities laws. However, CareSuper will, from time to time, be party to a securities class action where it is held that an investee company has broken the law, members have been disadvantaged and there is reasonable opportunity to receive compensation on behalf of members. 7. Transparency & disclosure CareSuper is committed to being transparent and accountable. On a six-monthly basis, the Fund s website is updated with a list of its top 20 holdings in the Australian and Overseas share portfolios as well as proxy voting records for the Australian shares portfolio. 8. Implementation of this Policy The Investment Team is responsible for the implementation of this Policy with oversight by the IC. Ultimately the Board bears responsibility for the determination of the Policy and any changes made in the course of review of the Policy. 9. Review This Policy will be reviewed annually or sooner if required. For example, changes to relevant industry standards or guidance from APRA and ASIC may be triggers for revisiting this Policy. 6