IN FOCUS6-8 min read

Proxy voting: how we influence corporate behaviour around the world

Daniel Veazey, Head of Corporate Governance Analysts, rounds up the sustainability team's proxy voting activity in the third quarter - from votes on remuneration to diversity.



Daniel Veazey
Head of Corporate Governance Analysts

Proxy voting is a crucial opportunity for shareholders who want to have their say over how public companies are governed. 

Needless to say, the third-quarter voting season has been unique this year. The coronavirus crisis has renewed urgency on environmental, social and governance considerations and calls for corporate behaviour to remain under the spotlight have been widespread.

The global Covid-19 pandemic also meant many companies moved to virtual Annual General Meetings. We are generally supportive of in-person AGMs as they encourage open discussion with management, but virtual meetings have also had some benefits.

Here's a round-up of our proxy voting activity around the world in the third quarter of 2020 (i.e. 1st July - 30th September). 

UK: bonus forfeits and votes against "over-boarders" 

Dividend cancellations, executive pay freezers or cuts and bonus forfeits were among subjects raised during engagements in the period from July to September. Management taking pay cuts for three months was a recurring theme. 

In an undeniably tough environment we were looking to support companies, but we also have a duty to ensure long-term sustainability of firms is not compromised. There have been discussions on "over-boarded" directors.

In some cases this led to us voting against individuals we deemed too stretched, especially where they also chaired audit committees.

Europe: new requirements see remuneration policies in transition

Remuneration policy and reporting requirements were updated and extended in the Shareholder Rights Directive II of June 2019. The update means shareholders have the right to more information and voting power on remuneration. 

We have seen 2020 as a transitional year and will expect more of companies next year.

Both Belgium and Germany missed the June 2019 transposition deadline, for example. 

We voted against remuneration policy resolutions at 32 Swedish businesses due to lack of disclosure - more than 50% of the total remuneration policies voted on 

It will take the smaller regions some time to adjust and catch up with the likes of France and Spain.

Asia: a more lenient approach to cash hoarders due to the pandemic 

Japanese companies have long been criticised for their hoarding of cash dividends. 

We typically vote against the allocation of income proposals when the dividend pay-out ratio is less than satisfactory.

Following the impact of the coronavirus crisis, we have introduced a more lenient approach. As a result, there have been fewer votes against management for allocation of income proposals - down from 13% in 2019 to 8% in 2020.

However, we are still prepared to vote against companies with sizable sums of idle cash.

North America: increased votes against boards lacking diversity and auditor risks 

This season has seen a slight increase in votes against management from 2019. 

We have opposed director elections due to insufficient boardroom gender diversity. On the back of our new policy to vote against the nomination commitee chair (NMC) of companies with less than 20% representation of women on the board, so far in 2020 we have voted against the NMC 71 times. 

We have increased votes against the ratification of auditors this season due to the duration of their tenure. This has been underpinned by our new policy to vote against the re-election of auditors where tenure exceeds 20 years and there is no commitment to put the audit out to tender in the near term. 

For the latest Sustainable Investment Report (third quarter 2020), click here

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Daniel Veazey
Head of Corporate Governance Analysts


Cazenove Capital is a trading name of Schroders (C.I.) Ltd which is licensed under the Banking Supervision (Bailiwick of Guernsey) Law 2020 and the Protection of Investors (Bailiwick of Guernsey) Law 2020, as amended in the conduct of banking and investment business. Registered address at Regency Court, Glategny Esplanade, St. Peter Port, Guernsey GY1 3UF, (No.24546) . Schroders (C.I.) Limited, Jersey Branch is regulated by the Jersey Financial Services Commission in the conduct of investment business. Registered address at IFC1, Esplanade, St Helier, Jersey, JE2 3BX, (No.31076).

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