July 2015 to December 2015

Proxy Voting by CSC 
1 July 2015 to 31 December 2015

In the six month period to 31 December 2015 (previous 6 month information in parentheses):

  • CSC’s votes were exercised on 935 (350) resolutions at 179 (68) meetings of 174 (62) companies.
  • There were no abstentions on any resolutions at any meeting.
  • The majority of contentious resolutions continue to relate to the election of directors and incentive arrangements, including remuneration.
  • CSC supported  96% (95%) of resolutions put to shareholders.

 

 

 

 

Key Statistics Dec 2014Jun 2015Dec 2015
Number of company meetings where votes were submitted 294 68 285
Number of resolutions voted on 1510 350 935
% of meetings where remuneration reports were considered 90% 69% 60%
% of remuneration reports that were not supported by CSC 14% 11% 4%
Total resolutions for a board spill
(in the event of a "second strike") considered
13 1 4
Resolutions for a board spill supported by CSC        0 0 0
% of resolutions where director elections were supported 95% 96% 97%
 
 

1.1 Remuneration

CSC supports compensation arrangements for management and directors that are reasonable and fit for the purpose of attracting and rewarding talent.  In assessing non-binding resolutions to adopt remuneration reports CSC expects to see clear and concise remuneration reports that disclose all relevant information, facilitate understanding of the company’s remuneration policy and are aligned with shareholder interests.

  • Between July and December 2015 CSC‘s votes were exercised in respect of 172 resolutions seeking support for remuneration reports.  CSC voted against 6 of those reports for failure to meet the expectations outlined above.
     
  • CSC’s voting adviser CGI Glass Lewis has noted a general improvement in board remuneration practices since 2013. This is also reflected in the consistent decline in CSC’s votes against remuneration reports over the past six and twelve months. These “against” votes generally reflect 1) poor disclosure and poorly-designed policies at small-cap companies; (2) non-transparent performance hurdles for executive directors; and (3) payments and share grants not demonstrably aligned with the performance of executive directors.

Where a company receives more than 25% of votes against its remuneration report in two consecutive years, the Corporations Act now gives shareholders the right to vote on whether an entire board should stand for re-election. These reforms also prohibit key management personnel from voting on: (1)  the remuneration report; (2) any two-strikes board spill; and (3) from hedging incentive remuneration.  This effectively removes the ability for executives to vote and approve their own pay. Shareholder approval is now also required for a declaration of “no vacancy” (previously used by boards to limit board size).

In line with our investment manager recommendations, CSC voted on 4 spill resolutions during the period, supporting company recommendations against the resolution.

Investors were asked to approve an increase in the maximum aggregate level of fees that could be paid to the company’s non-executive directors at 27 meetings during the period.   In line with our investment manager recommendations, CSC supported all 27 proposals. 

1.2 Director Election

CSC considered 404 proposals for director elections, rejecting 15 proposals. Board independence and the lack of board’s commitment to regulatory disclosure were the reasons given by CSC’s investment managers in support of their recommendations against appointments/reappointments.

1.3 Constitutional matters

CSC supported proposals for a total of 11 constitutional amendments sought by companies. 

2 Proxy voting at meetings of international companies

CSC contracts CGI Glass Lewis (CGL) to provide research and voting service for all of our unimpeded* International Equities holdings.  This relationship has increased CSC’s voting transparency in international markets.

* “It is understood that, in markets that require share blocking, account re-registration or any other additional steps or impediments to voting, Glass Lewis shall refrain from submitting proxy votes on Customer’s behalf, unless previously agreed to by the Parties…”

Over the six months to December 2015, CGL has voted at 531 (2,222) meetings on 4,547 (28,567) resolutions in 51 Countries over 9 regions (excluding Australia).

There is a high proportion of ‘Take No Action’ in European ballots, mostly concentrated in Switzerland. Switzerland allows share blocking (i.e. blocking shares from trading for a period prior to the shareholder meeting) and CSC’s voting policy is to vote Take No Action in such case.

CSC's International voting July to December 2015 
   
IssueResolutionsResolutions supported% not supported in this category
Audit/Financials  660 603 9%
Board Related 1995 1624 19%
Capital Management 629 539 14%
Changes to Company Statutes  240 173 28%
Compensation 483 386 20%
M&A 133 123 8%
Meeting Administration 221 206 7%
Other 106 97 8%
SHP: Compensation 9 3 67%
SHP: Environment 3 0 100%
SHP - Governance 57 11 81%
SHP - Social 10 7 30%