Proxy Voting Report July to December 2013
1. Proxy Voting Outcome Summary
In the six month period to 30 December 2013:
- CSC’s votes were exercised on 1372 resolutions at 266 meetings of 252 Australian companies.
- CSC abstained on a further 11 resolutions, primarily for reasons of capital management on the advice of CSC’s investment managers.
- The majority of contentious resolutions continue to relate to the elections of directors and incentive issues, including remuneration.
- CSC supported 89% of resolutions put to shareholders.
- CSC supported all resolutions at 178, or 67% of meetings.
Figure 1. CSC Proxy Voting in Australia Jul 2012 to Jun 2013
|Jul to Dec 2012||Jan to Jun 2013||Jul to Dec 2013|
|Number of company meetings where votes were submitted||264||73||266|
|Number of resolutions voted on||1,310||364||1372|
|% of meetings where all resolutions were supported||66%||86%||67%|
|% of meetings where remuneration reports were considered||89%||66%||89%|
|% of remuneration reports that were not supported by CSC||29%||6.2%||12%|
|Total resolutions for a board spill (in the event of a "second strike") considered||21||3||13|
|Resolutions for a board spill supported by CSC||1||0||1|
|% of resolutions where director elections were supported||91.3%||97%||93%|
- 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.
- During the proxy voting period of July to December 2013, CSC‘s votes were exercised in respect of 238 resolutions seeking support for remuneration reports. CSC voted against 29 of those reports for failure to meet the expectations outlined above.
- Along with other investors CSC observes a trend for improvement in board remuneration practices during the period. Exceptions to this trend included opposition by CSC managers to remuneration reports and payments to directors and executives due to poor disclosure, and poorly-designed policies at companies.
- CSC also voted against specific grants to directors due to insufficiently explained performance hurdles, large payments not demonstrably aligned with performance and share grants to non-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 the remuneration report and any two-strikes board spill, as well as 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 their number of directors).
- CSC voted on 13 spill resolutions during the period, supporting company recommendations against the resolutions in all but one instance.
- 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 38 meetings during the period. CSC found insufficient reasons to support 2 of these proposals.
1.3 Director Election
CSC considered 564 proposals for director elections, rejecting 37 resolutions during the period. Concerns about deficits in director independence continue to underlie most rejections.
A number of companies also attracted CSC’s votes against the re-election of directors whose attendance has been inadequate during the year. Relevant directors at these companies all failed to attend 75% or more of board and committee meetings without adequate explanation.
Unusually, CSC abstained from voting upon a director election during the period.
1.4 Constitutional Matters
CSC rejected proposals for 3 constitutional amendments among a field of 38 amendments sought by companies. CSC opposed these proposals because the proposed amendments were seen as attempts to limit board size without recourse to shareholder views.
1.5 Proxy Voting at meetings of international companies
Upon the introduction of a new agreement with CGI Glass Lewis (CGL) on 1 July 2013, CGL has provided a research and voting service for all unimpeded International Equities holdings in accordance with CGL voting policies in each country on CSC’s behalf. (It is noted that we do not vote in markets that require share blocking, account re-registration or any other additional steps or impediments to voting.) This service brings enhanced reporting on the voting of CSC’s interests in relevant markets.
From July 2013 CGI Glass Lewis has researched and voted upon CSC’s International Equities holdings in accordance with CGI GL’s voting policies. During this period CGI GL has voted at 511 meetings on 3,567 resolutions in 41 Countries over 7 regions (excluding Australia). Eighty nine percent of CSC’s votes have been exercised in support of management proposals at meetings held outside Australia.
Figure 2. Key Statistics for International proxy voting
|CSC's International voting Jul to Dec 2013|
|Issue Categories||No of resolutions||Resolutions not supported|
|Issue of new shares||89||9||
|Financial scheme/ reconstruciton of capital||35||10||29%|
|Constitution/ articles of association change||901||231||26%|
|Appoint/ Reappoint Auditor||1388||157||11%|
|Takeover or merger acquisition||88||7||8%|
|SHP - Environment||81||79||98%|
|SHP - Social||112||81||72%|
|All Other Proposals||9867||1950||20%|
Figure 3. Ballots by Region and Vote Status