June 2013

Proxy Voting Report January to June 2013    

1.  Proxy Voting in Australia

1.1 Overview

In the six month period to 30 June 2013 CSC’s votes were exercised on 364 resolutions at 73 meetings of 66 companies.

  • The majority of contentious resolutions related to the elections of directors and incentive issues, including      remuneration
  • CSC supported 96% of resolutions put to shareholders
  • CSC supported all resolutions at 63, or 86% of meetings.

Figure 1.  CSC Proxy Voting in Australia Jul 2012 to Jun 2013

 Key Statistics

 Jul to Dec 2012Jan to Jun 2013
Number of company meetings where votes were submitted 264 73
Number of resolutions voted on 1,310 364
% of meetings where all resolutions were supported 66% 86%
% of meetings where remuneration reports were considered 89% 66%
% of remuneration reports that were not supported by CSC 29% 6.2%
Total resolutions for a board spill (in the event of a "second strike") considered 21 3
Resolutions for a board spill supported by CSC      1 0

1.2  Remuneration

Remuneration Reports

Non-binding resolutions to adopt remuneration reports were introduced in 2005. In assessing these 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.

Hurdles against which this expectation is assessed include:

  • Clear disclosure
  • Sufficient detail of total remuneration for executive and non executive directors including the level of aggregate fees paid, appropriate retirement benefit entitlements and any participation in short and long term incentive schemes
  • Clear disclosure of total remuneration of chief executives including short and long term incentives, details of      performance hurdles and termination benefits.

CSC among other investors has opposed fewer remuneration reports, having noted an improvement in broad remuneration practices during the period. 

During the period CSC ‘s votes were exercised in respect of 48 resolutions seeking support for remuneration reports.  CSC voted against 3 of those reports for failure to meet the expectations outlined above.

Corporations Act Amendments (Improved Accountability on Director and Executive Remuneration) Bill

Second strikes and subsequent resolutions to spill the board

Amendments to the Corporations Act passed the Senate in June 2011, giving shareholders the right to vote on whether an entire board should stand for re election where a company receives more than 25% of votes against its remuneration report in two consecutive years.  The reforms also prohibit key management personnel from voting on the remuneration report, any two strikes board spill and from hedging incentive remuneration.  These changes have removed 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 the number of directors on boards and the ability of shareholders to determine board size and composition.

CSC voted on 3 spill resolutions during the period, supporting company recommendations against the resolutions in each instance.

Non-Executive (NED) Director Remuneration

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 13 meetings during the period. CSC found insufficient support for 2 of these proposals.

1.3  Director Elections

CSC considered 147 proposals for director elections during the period. CSC opposed the election of four company directors on the basis of concerns about director independence.

1.4   Constitutional matters

Only 1 resolution for constitutional amendment drew CSC’s vote against among a field of 15 amendments sought by companies so far this year. An attempt by one company to introduce a proportional takeover provision was not considered to be in the interests of CSC members and CSC shares were voted against the proposal.

2.  Proxy Voting at meetings of international companies

Until 30 June CSC’s international equities managers were mandated to vote CSC’s holdings wherever practical and consistent with CSC’s ESG policy.

International voting trends increasingly support:

  • Advisory votes on remuneration
  • Independence of board chairs and CEO succession planning
  • Removal of CEOs from compensation committees
  • Conditions for the awarding of stock options
  • Reduction of supermajority voting requirements. 

From 1 July 2013 CGI Glass Lewis has been contracted to vote CSC’s international equities holdings in line with CSC policy. The first report on this activity will be posted here early in 2014.