AllianzGI voting record reveals UK companies continue to lead the pack in corporate governance standards
Allianz Global Investors, one of the world’s leading active investment managers has published its annual analysis of how it voted on more than 100,000 shareholder and management proposals in 2020, with figures revealing a continued and stark disparity globally in corporate governance standards.
Participating in 10,183 (2019: 9,532) shareholder meetings over the course of 2020, AllianzGI voted against, withheld or abstained from at least one agenda item at 72 per cent (2019: 77 per cent) of all meetings globally. It opposed 23 per cent (2019: 24 per cent) of all resolutions globally, whereas in the UK AllianzGI opposed just 5 per cent of meetings, reflecting the UK’s continued high levels of corporate governance standards. On the contrary, the USA and Japan lagged behind again with AllianzGI opposing 34 per cent and 41 per cent of overall resolutions respectively.
These figures reflect AllianzGI’s highly active and globally consistent approach to stewardship and a willingness to vote against proposals that do not meet its expectations of investee companies as well as fulfilling its duty to act in the interests of clients by considering each proposal on merit.
Compensation related proposals continued to stand out as the most contentious area globally during 2020, with AllianzGI voting against 49 per cent (2019: 48 per cent) of all compensation related management proposals. The key reasons for voting against compensation related proposals were when packages were not supported by robust and challenging targets, and when there was not sufficient transparency of performance KPIs and actual targets.
As of 2021, AllianzGI amended its Proxy Voting Guidelines, scrutinising generous pay proposals on a case by case basis whenever companies received substantial direct state aid, substantial lay-offs were recorded or dividend cuts happened (not prescribed by regulators) as a result of the Covid-19 pandemic.
In the UK, AllianzGI voted against 12 per cent of all remuneration-related proposals, compared to 20 per cent in 2019. Executive pay is generally well-formed in the UK, however areas of dissent in 2020 included lack of sufficiently long performance/holding period, insufficient remuneration disclosure or targets not being robust enough.
As 2020 saw a renewal of many remuneration policies as well as an updated Corporate Governance Code there was significant engagement with companies on this topic, including pension alignment and post-cessation holding periods. An additional complication for 2020 was Covid-19 and the potential implications for current year outcomes as well as target setting for future compensation plans.
Simon Gergel, CIO UK equities, at Allianz Global Investors, says: “Proxy voting is a key part of the fiduciary responsibility we have to our clients as an active investor and it is a core part of Allianz Global Investors’ stewardship process.
“For the fourth consecutive year, the UK has shown real leadership when it comes to corporate governance standards. Overall, votes against management resolutions are low and boards are well supported. Remuneration remains the only major area of contention for the UK market, but following the uncertainty of Covid-19, it is important to highlight that adverse votes decreased significantly as management and boards were supported during this challenging period.”
AllianzGI considers voting on environmental and social matters a key part of our stewardship programme. During 2020, AllianzGI showed strong support for shareholder resolutions on these matters. It backed almost 90 per cent of all proposals requesting improved reporting on climate change and sustainability and 100 per cent of proposals on community environmental impact. Human rights were another area where we showed strong support, voting for almost 95 per cent of all proposals. This includes any human rights items, such as improving company’s human rights standards or policies.
Despite a slight decrease in votes against director related proposals, (26 per cent in 2020 vs. 27 per cent in 2019), major concerns remain with respect to a sound and balanced set-up of many boards. AllianzGI voted against several companies where the board of directors and/or board committees were not sufficiently independent as a result of directors with long tenure or who are representatives from major shareholders. Over-boarding also remains a major concern. We stood fully behind corporate governance related shareholder resolutions, supporting 100 per cent of all proposals globally, requesting an independent Chair of the Board. AllianzGI supported shareholder proposals that sought to improve corporate governance practices of investee companies and to enhance shareholder rights.
“AllianzGI recognises that voting power comes with responsibility and we actively undertake and encourage constructive engagement with investee companies. At the same time, we use our voting power to inform companies of our views and expectations, and to protect and advance the interests of our clients, which means that we are prepared to vote against management as and when necessary to achieve these objectives,” says Gergel.