Annual Implementation Statement - Voting Summary - Plan year ending 05 April 2021 - Voting ...
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Accenture Pension Plan
Annual Implementation
Statement – Voting Summary
Plan year ending 05 April 2021
September 2021
1Introduction
This document is supplementary to the Annual Implementation Statement (“the statement”) prepared
by the Trustee of Accenture Pension Plan (“the Plan”) covering the Plan year (“the year”) to 05 April
2021. It provides additional detail on the key voting and engagement activities for the managers
during the year.
Some of the Plan’s underlying investment strategies, such as fixed income holdings, do not have any
voting rights attached and have been excluded from the table below. These include the Fixed Annuity
Bond Fund, Inflation-Linked Annuity Bond Fund and Corporate Bond Tracker Fund.
The Trustee is satisfied with how the managers voted during the Plan year. All data was provided by
the investment managers.
Notes:
The following five conflicts were provided to investment managers and have been sourced from the
Vote reporting template for pension scheme implementation statement issued by the Pensions and
Lifetime Savings Association (“PLSA”):
1. The asset management firm overall has an apparent client-relationship conflict e.g. the
manager provides significant products or services to a company in which it also has an equity
or bond holding;
2. Senior staff at the asset management firm hold roles (e.g. as a member of the Board) at a
company in which the asset management firm has equity or bond holdings
3. The asset management firm’s stewardship staff have a personal relationship with relevant
individuals (e.g. on the Board or the company secretariat) at a company in which the firm has
an equity or bond holding
4. There is a situation where the interests of different clients diverge. An example of this could
be a takeover, where one set of clients is exposed to the target and another set is exposed to
the acquirer
5. There are differences between the stewardship policies of managers and their clients
23
What is LGIM’s policy on consulting with clients before voting?
LGIM’s voting and engagement activities are driven by ESG professionals and its assessment of the
requirements in these areas seeks to achieve the best outcome for all its clients. LGIM’s voting policies
are reviewed annually and take into account feedback from its clients.
Every year, LGIM holds a stakeholder roundtable event where clients and other stakeholders (civil
society, academia, the private sector and fellow investors) are invited to express its views directly to the
members of the Investment Stewardship team. The views expressed by attendees during this event form
a key consideration as LGIM continues to develop its voting and engagement policies and define
strategic priorities in the years ahead. LGIM also takes into account client feedback received at regular
meetings and/ or ad-hoc comments or enquiries.
Please describe whether LGIM has made use of any proxy voter services
LGIM’s Investment Stewardship team uses ISS’s ‘ProxyExchange’ electronic voting platform to
electronically vote clients’ shares. All voting decisions are made by LGIM and it does not outsource any
part of the strategic decisions. LGIM’s use of ISS recommendations is purely to augment its own research
and proprietary ESG assessment tools. The Investment Stewardship team also uses the research reports
of Institutional Voting Information Services (IVIS) to supplement the research reports received from ISS
for UK companies when making specific voting decisions
To ensure its proxy provider votes in accordance with LGIM’s position on ESG, it has put in place a
custom voting policy with specific voting instructions. These instructions apply to all markets globally and
seek to uphold what LGIM considers to be minimum best practice standards which it believes all
companies globally should observe, irrespective of local regulation or practice.
LGIM retains the ability in all markets to override any vote decisions, which are based on its custom
voting policy. This may happen where engagement with a specific company has provided additional
information (for example from direct engagement, or explanation in the annual report) that allows them to
apply a qualitative overlay to its voting judgement. LGIM has strict monitoring controls to ensure its votes
are fully and effectively executed in accordance with its voting policies by its service provider. This
includes a regular manual check of the votes input into the platform, and an electronic alert service to
inform LGIM of rejected votes which require further action.
Please provide an overview of LGIM’s process undertaken for deciding how to vote
All decisions are made by LGIM’s Investment Stewardship team and in accordance with its Corporate
Governance & Responsible Investment and Conflicts of Interest policy documents which are reviewed
annually. Each member of the team is allocated a specific sector globally so that the voting is undertaken
by the same individuals who engage with the relevant company. This ensures LGIM’s stewardship
approach flows smoothly throughout the engagement and voting process and that engagement is fully
integrated into the vote decision process, therefore sending consistent messaging to companies.
Is LGIM currently affected by any of the five conflicts listed by the PLSA (see notes) or any other
conflicts across any of its holdings?
There are a number of potential conflicts of interest inherent in the corporate governance activity
undertaken at LGIM. Detailed in the Investment Stewardship Conflicts of Interest policy, are some of the
frequent conflicts of interests that LGIM identify and resolve through the application of the conflicts of
interest policy.
Please include here any additional comments which are relevant to LGIM’s voting activities or
processes
LGIM sees it as vital that the proxy voting service is regularly monitored and LGIM do this through
quarterly due diligence meetings with ISS. Representatives from a range of departments attend these
meetings, including the client relationship manager, research manager and custom voting manager. The
meetings have a standing agenda, which includes setting out its expectations, an analysis of any issues
experienced when voting during the previous quarter, the quality of the ISS research delivered, general
service level, personnel changes, the management of any potential conflicts of interest and a review of
the effectiveness of the monitoring process and voting statistics. The meetings will also review any action
points arising from the previous quarterly meeting.
4LGIM has its own internal Risk Management System (RMS) to provide effective oversight of key
processes. This includes LGIM's voting activities and related client reporting. If an item is not confirmed
as completed on RMS, the issue is escalated to line managers and senior directors within the
organisation. On a weekly basis, senior members of the Investment Stewardship team confirm on LGIM’s
internal RMS that votes have been cast correctly on the voting platform and record any issues
experienced. This is then reviewed by the Director of Investment Stewardship who confirms the votes
have been cast correctly on a monthly basis. Annually, as part of its formal RMS processes the Director
of Investment Stewardship confirms that a formal review of LGIM’s proxy provider has been conducted
and that it has the capacity and competency to analyse proxy issues and make impartial
recommendations.
Accenture Pension Plan – DB section
LGIM – All-World Equity Index Fund
Voting Activities
• There were 70,672 eligible votes for the fund over the 12 months to 31 March 2021
• The manager exercised 99% of its votes over the year
• 16% of votes were against management and less than 1% were abstained
• Less than 1% of votes were contrary to the proxy advisor’s recommendation
5Most significant vote – Vote 1: Imperial Brands plc
Resolution: 2. Approve Remuneration report & 3. Approve remuneration policy.
Approximate size of the fund’s holding as at the date of the vote: N/A
Guidance – Proxy: Not provided, Management: Not provided
Action: Against both resolutions.
The company appointed a new CEO during 2020, who was granted a significantly higher base salary
than his predecessor. A higher base salary has a consequential ripple effect on short- and long-term
incentives, as well as pension contributions. Further, the company did not apply best practice in relation
to post-exit shareholding guidelines as outlined by both LGIM and the Investment Association. An
incoming CEO with no previous experience in the specific sector, or CEO experience at a FTSE100
company, should have to prove her or himself beforehand to be set a base salary at the level, or higher,
of an outgoing CEO with multiple years of such experience. Further, LGIM would expect companies to
adopt general best practice standards. Prior to the AGM, LGIM engaged with the company outlining what
LGIM concerns over the remuneration structure were. LGIM also indicated that LGIM publish specific
remuneration guidelines for UK-listed companies and keep remuneration consultants up to date with
LGIM thinking.
LGIM deem this vote to be significant as it highlights the challenges of factoring in the impact of the
COVID situation into the executive remuneration package.
LGIM considers this vote significant as LGIM are concerned over the ratcheting up of executive pay; and
LGIM believe executive directors must take a long-term view of the company in their decision-making
process, hence the request for executives’ post-exit shareholding guidelines to be set.
Outcome: Resolution 2 (Approve Remuneration Report) received 40.26% votes against, and 59.73%
votes of support. Resolution 3 (Approve Remuneration Policy) received 4.71% of votes against, and
95.28% support.
Most significant vote – Vote 2: Samsung Electronics
Resolution: Three resolutions on elections of Outside Directors
Approximate size of the fund’s holding as at the date of the vote: N/A
Guidance – Proxy: Not provided, Management: Not provided
Action: Against all three resolutions
In January 2021, Lee Jae-yong, the vice chairman of Samsung Electronics and only son of the former
company chairman, was sentenced to two years and six months in prison for bribery, embezzlement and
concealment of criminal proceeds worth about KRW 8.6 billion. Lee Jae-yong was first sentenced to five
years in prison in August 2017 for using the company's funds to bribe the impeached former President
Park Geun-hye. While Lee was released from prison, he was not acquitted of the charges. Based on the
court's verdict, Lee actively provided bribes and implicitly asked then president Park to use her power to
help his smooth succession. The court further commented that the independent compliance committee
established in January 2020 has yet to become fully effective. LGIM engaged with the company ahead
of the vote. However, LGIM were not satisfied with the company’s response that ties have been severed.
LGIM are concerned that Lee Jae-yong continues to make strategic company decisions from prison.
Additionally, LGIM were not satisfied with the independence of the company board and that the
independent directors are really able to challenge management. LGIM voted against the resolutions as
the outside directors, who should provide independent oversight, have collectively failed to remove
criminally convicted directors from the board. The inaction is indicative of a material failure of governance
and oversight at the company.
6LGIM considers this vote as significant as it described the vote as high-profile with a high degree of
controversy – resulting in high client and/or public scrutiny. The sanction vote was a result of direct or
collaborative engagement.
Outcome: The meeting results are not yet available.
7Accenture Pension Plan – ARF section
LGIM APP Global Equity Index Fund
Voting Activities
• There were 77,348 eligible votes for the fund over the 12 months to 31 March 2021
• The manager exercised 100% of its votes over the year
• 15% of votes were against management and less than 1% were abstained
• Less than 1% of votes were contrary to the proxy advisor’s recommendation
8Most significant vote – Vote 1: Whitehaven Coal
Resolution: 3. Resolution 6 Approve capital protection. Shareholders are asking the company for a
report on the potential wind-down of the company’s coal operations, with the potential to return increasing
amounts of capital to shareholders.
Approximate size of the fund’s holding as at the date of the vote: N/A
Guidance – Proxy: Not provided, Management: Not provided
Action: For
The role of coal in the future energy mix is increasingly uncertain, due to the competitiveness of
renewable energy, as well as increased regulation: in Q4 2020 alone three of Australia’s main export
markets for coal – Japan, South Korea and China – have announced targets for carbon neutrality around
2050. LGIM has publicly advocated for a ‘managed decline’ for fossil fuel companies, in line with global
climate targets, with capital being returned to shareholders instead of spent on diversification and growth
projects that risk becoming stranded assets. As the most polluting fossil fuel, the phase-out of coal will be
key to reaching these global targets.
LGIM deem this vote to be significant as the vote received media scrutiny and is emblematic of a growing
wave of ‘green’ shareholder activism.
Outcome: The resolution did not pass, as a relatively small amount of shareholders (4%) voted in favour.
However, the environmental profile of the company continues to remain in the spotlight: in late 2020 the
company pleaded guilty to 19 charges for breaching mining laws that resulted in ‘significant
environmental harm’. As the company is on LGIM’s Future World Protection List of exclusions, many of
LGIM’s ESG-focused funds – and select exchange-traded funds – were not invested in the company.
Most significant vote – Vote 2: SIG plc.
Resolution: Resolution 5: Approve one-off payment to Steve Francis proposed at the company’s special
shareholder meeting held on 9 July 2020.
Approximate size of the fund’s holding as at the date of the vote: N/A
Guidance – Proxy: Not provided, Management: Not provided
Action: Against
The company wanted to grant their interim CEO a one-off award of £375,000 for work carried out over a
two-month period (February - April). The CEO agreed to invest £150,000 of this payment in acquiring
shares in the business, and the remaining £225,000 would be a cash payment. The additional payment
was subject to successfully completing a capital-raising exercise to improve the liquidity of the business.
The one-off payment was outside the scope of their remuneration policy and on top of his existing
remuneration, and therefore needed shareholder support for its payment. LGIM does not generally
support one-off payments. LGIM believe that the remuneration committee should ensure that executive
directors have a remuneration policy in place that is appropriate for their role and level of responsibility.
This should negate the need for additional one-off payments. In this instance, there were other factors
that were taken into consideration. The size of the additional payment was a concern because it was for
work carried over a two-month period, yet was equivalent to 65% of his full-time annual salary. £225,000
was to be paid in cash at a time when the company’s liquidity position was so poor that it risked
breaching covenants of a revolving credit facility and therefore needed to raise additional funding through
a highly dilutive share issue.
LGIM deem this vote to be significant as they feel that the vote is high-profile and controversial.
Outcome: The resolution passed. However, 44% of shareholders did not support it. LGIM believe that
with this level of dissent the company should not go ahead with the payment.
9LGIM APP UK Equity Index Fund Voting Activities • There were 11,844 eligible votes for the fund over the 12 months to 31 March 2021 • The manager exercised 100% of its votes over the year • 7% of votes were against management and
addition to his annual variable pay and outside the normal bonus structure. LGIM does not support one-
off discretionary bonuses (or transaction bonuses) as these are not within the approved policy to reward
the achievement of pre-set targets. Moreover, discussions with tax authorities and the obtaining of
preferential tax structures for the company are seen as part of a CFO’s day-to-day job and should not be
remunerated separately. Instead, a preferential tax treatment will benefit future performance and will
therefore be rewarded within annual bonus and long-term incentives in future performance years.
LGIM deem this vote as significant on the basis that There was a level of media interest regarding the
withdrawal of the resolution. This, combined with the other shortcomings of this company in relation to the
expectations of a company listed in London, make this a significant vote. Shareholder dissent to the
resolution was sufficiently high that the proposal was withdrawn ahead of the AGM; this will result in the
company being included in the UK Investment Association’s Public Register.
Outcome: Given the level of shareholder dissent, Resolution 17 was withdrawn ahead of the AGM, while
all the other resolutions were passed. The company stated that: 'The board and the remuneration
committee consider that a bonus is appropriate given the outstanding efforts of [the CFO].’As such,
Plus500 intends to again propose the resolution for shareholder approval at the EGM to cover 2021
director pay (as is required under Israeli law).
LGIM APP Overseas Equity Index Fund
Voting Activities
• There were 29,692 eligible votes for the fund over the 12 months to 31 March 2021
• The manager exercised 100% of its votes over the year
• 20% of votes were against management andOutcome:
Even though shareholders did not give majority support to Amber’s candidates, its proposed resolutions
received approx. between 30-40% support, a clear indication that many shareholders have concerns with
the board. (Source: ISS data)
Most significant vote – Vote 2: AmerisourceBergen Corporation
Resolution:
Resolution 17: Resolution 3: Advisory Vote to Ratify Named Executive Officers' Compensation
Approximate size of the fund’s holding as at the date of the vote: N/A
Guidance – Proxy: Not provided, Management: Not provided
Action: Against
During the same year the Company recorded a $6.6 billion charge related to opioid lawsuits, its CEO’s
total compensation was approximately 25% higher than the previous year. By excluding the settlement
costs, the Compensation Committee ensured executive pay was not impacted by an operating loss of
$5.1bn (on unadjusted basis). LGIM has in previous years voted against executives’ pay packages due
to concerns over the remuneration structure not comprising a sufficient proportion of awards assessed
against the company’s performance. LGIM voted against the resolution to signal LGIM’s concern over the
overall increased compensation package during a year that the company recorded a $6.6bn charge
related to opioid lawsuits and a total operating loss of $5.1 billion.
LGIM deem this vote as significant on the basis that LGIM considers it imperative that pay structures are
aligned with company performance and that certain expenses over which directors have control and
influence should not be allowed to be excluded in the calculation of their pay, in particular if these would
be detrimental to the executive director(s) in question.
Outcome: The resolution encountered a significant amount of oppose votes from shareholders, with
48.36% voting against the resolution and 51.63% supporting the proposal.
LGIM APP Global Assets Fund
Voting Activities
• There were 78,112 eligible votes for the fund over the 12 months to 31 March 2021
• The manager exercised 100% of its votes over the year
• 15% of votes were against management and less than 1% were abstained
• Less than 1% of votes were contrary to the proxy advisor’s recommendation
Most significant vote – Vote 1: Qantas Airways Limited
Resolution: Resolution 3 Approve participation of Alan Joyce in the Long-Term Incentive Plan
Resolution 4 Approve Remuneration Report.
Approximate size of the fund’s holding as at the date of the vote: N/A
Guidance – Proxy: Not provided, Management: Not provided
Action: Against resolution 3, for resolution 4
12The COVID crisis has had an impact on the Australian airline company’s financials. In light of this, the
company raised significant capital to be able to execute its recovery plan. It also cancelled dividends,
terminated employees and accepted government assistance. The circumstances triggered extra scrutiny
from LGIM as LGIM wanted to ensure the impact of the COVID crisis on the company’s stakeholders was
appropriately reflected in the executive pay package. In collaboration with LGIM Active Equities team,
LGIM’s Investment Stewardship team engaged with the Head of Investor Relations of the company to
express LGIM’s concerns and understand the company’s views. The voting decision ultimately sat with
the Investment Stewardship team. LGIM supported the remuneration report (resolution 4) given the
executive salary cuts, short-term incentive cancellations and the CEO’s voluntary decision to defer the
vesting of the long-term incentive plan (LTIP), in light of the pandemic. However, LGIM’s concerns as to
the quantum of the 2021 LTIP grant remained, especially given the share price at the date of the grant
and the remuneration committee not being able to exercise discretion on LTIPs, which is against best
practice. LGIM voted against resolution 3 to signal LGIM’s concerns..
LGIM considers this vote significant as It highlights the challenges of factoring in the impact of the COVID
situation into the executive remuneration package.
Outcome: About 90% of shareholders supported resolution 3 and 91% supported resolution 4. The
meeting results highlight LGIM’s stronger stance on the topic of executive remuneration, in LGIM’sview.
Most significant vote – Vote 2: Hollywood Bowl Group
Resolution: Resolution 2: approve remuneration report Resolution 3: re-elect Nick Backhouse as director
Resolution 7: re-elect Ivan Schofield as director Resolution 8: re-elect Claire Tiney as director
Approximate size of the fund’s holding as at the date of the vote: N/A
Guidance – Proxy: Not provided, Management: Not provided
Action: Against, and LGIM escalated their concerns by a vote against all the members of the
remuneration committee.
The bowling alley operator has been financially impacted by the COVID-19 pandemic. This resulted in
staff being furloughed and the company not paying dividends to shareholders. Despite this, the
remuneration committee decided to exercise its discretion to allow for the performance period of the 2017
Long-Term Incentive Plan (LTIP) award to be reduced from September 2020 to February 2020, to avoid
having to factor-in the financial consequences of the pandemic into the incentive plan. This resulted in the
pro-rated LTIP vesting at 81% of salary. The remuneration committee did not consult with LGIM before
taking the decision to retrospectively reduce the performance period of the LTIP. LGIM applied LGIM’s
policy and sanctioned this practice by a vote against the remuneration report. Given the seriousness of
LGIM’s concerns and the precedent this could set, LGIM decided to escalate LGIM’s vote sanction by a
rare vote against all members of the remuneration committee.
LGIM deems this vote significant on the basis that LGIM took the rare step of escalating LGIM’s vote
against all members of the remuneration committee given the seriousness of LGIM’s concerns. This
highlights the importance of ensuring that executive remuneration remains in line with stakeholder
experience.
Outcome: 47.7% of shareholders opposed the remuneration report (resolution 2) and 15.8% the re-
election of the chair of the remuneration committee (resolution 8). The other members of the
remuneration committee (resolution 3 and 7) were only opposed by 4.2% and 4.0% of shareholders
respectively.
13LGIM APP Global Ethical Fund Voting Activities • There were 18,215 eligible votes for the fund over the 12 months to 31 March 2021 • The manager exercised 100% of its votes over the year • 16% of votes were against management and
that every board should have at least one female director. LGIM deem this a de minimis standard.
Globally, LGIM aspire to all boards comprising 30% women. In the beginning of 2020, LGIM announced
that LGIM would vote against the chair of the nomination committee or the most senior board member
(depending on the type of board structure in place) for companies included in the TOPIX100 where these
standards were not upheld. LGIM opposed the election of this director in his capacity as a member of the
nomination committee and the most senior member of the board, in order to signal that the company
needed to act on this issue.
LGIM deem this vote as significant on the basis that LGIM considers it imperative that the boards of
Japanese companies increase their diversity.
Outcome: Shareholders supported the election of the director.
APP Amanah Fund – HSBC Islamic Global Equity Index Fund
Voting Activities
• There were 1,605 eligible votes for the fund over the 12 months to 31 March 2021
• The manager exercised 97% of its votes over the year
• 13% of votes were against management andAction: For
Proposals by Amber were due to the opinion that the company strategy was not creating value for
shareholders, that the board members were not sufficiently challenging management on strategic
decisions, and for various governance failures. The company continues to have a commandite structure;
a limited partnership, which means that the managing partner has a tight grip on the company, despite
only having 7 % share capital and 11% voting rights. LGIM engages with companies on their strategies,
any lack of challenge to these, and with governance concerns. The company strategy had not been
value-enhancing and the governance structure of the company was not allowing the SB to challenge
management on this. Where there is a proxy contest, LGIM engages with both the activist and the
company to understand both perspectives. LGIM engaged with both Amber Capital, where HSBC were
able to speak to the proposed new SB Chair, and also Lagardère, where HSBC spoke to the incumbent
SB Chair. This allowed us to gain direct perspectives from the individual charged with ensuring their
board includes the right individuals to challenge management.
HSBC considers this vote significant as it was cast against the management recommendation and
covered a relevant shareholder right issue.
Outcome:
Supported Management
Most significant vote – Vote 2: Apple inc.
Resolution:
Link Executive Pay to Social Criteria
Approximate size of the fund’s holding as at the date of the vote: N/A
Guidance – Proxy: Not provided, Management: Not provided
Action: For
During the same year the Company recorded a $6.6 billion charge related to opioid lawsuits, its CEO’s
total compensation was approximately 25% higher than the previous year. By excluding the settlement
costs, the Compensation Committee ensured executive pay was not impacted by an operating loss of
$5.1bn (on unadjusted basis). LGIM has in previous years voted against executives’ pay packages due
to concerns over the remuneration structure not comprising a sufficient proportion of awards assessed
against the company’s performance. HSBC voted against the resolution to signal HSBC’s concern over
the overall increased compensation package during a year that the company recorded a $6.6bn charge
related to opioid lawsuits and a total operating loss of $5.1 billion.
HSBC deem this vote as significant as HSBC voted against the management recommendation on an
important shareholder resolution.
Outcome: Supported Management
16APP Global Equity Fund: Underlying fund 1:
Pzena – Global Expanded Value Equity
Voting Activities
• There were 1,030 eligible votes for the fund over the 12 months to 31 March 2021
• The manager exercised 100% of its votes over the year
• 4% of votes were against management and less than 1% were abstained
• 2% of votes were contrary to the proxy advisor’s recommendation
What is Pzena’s policy on consulting with clients before voting?
As a registered investment adviser and fiduciary, Pzena Investment Management (PIM) exercises its
responsibility, where applicable, to vote in a manner that, in its judgement, is in the client’s best interest
and will maximize shareholder value. Each proxy that comes to PIM to be voted shall be evaluated in
terms of what is in the best interest of their clients. Pzena deems the best interest of clients to be that
which maximizes shareholder value and yields the best economic results (e.g., higher stock prices, long-
term financial health, and stability).
PIM’s standard Investment Advisory Agreement provides that until notified by the client to the contrary,
PIM shall have the right to vote all proxies for securities held in that client’s account. Where PIM has
voting responsibility on behalf of a client, and absent any client specific instructions, PIM generally follows
the Voting Guidelines set forth below. These Guidelines, however, are not intended as rigid rules and do
not cover all possible proxy topics. Each proxy issue will be considered individually and PIM reserves the
right to evaluate each proxy vote on a case-by-case basis, as long as voting decisions reflect what is in
the best interest of their clients.
In those instances where PIM does not have proxy voting responsibility, PIM shall forward any proxy
materials to the client or to such other person as the client designates.
Please describe whether Pzena has made use of any proxy voter services
PIM has engaged Institutional Shareholder Services (“ISS”) to provide a proxy analysis with research and
a vote recommendation for each shareholder meeting of the companies in PIM's client portfolios. ISS also
votes, records, and generates a voting activity report for PIM's clients and assist PIM with recordkeeping
and the mechanics of voting. In no circumstance shall ISS have the authority to vote proxies except in
accordance with standing or specific instructions given to it by PIM. PIM retains responsibility for
instructing ISS how to vote, and PIM will still apply its own Voting Guidelines.
Please provide an overview of Pzena’s process undertaken for deciding how to vote
The analyst who is responsible for covering the company also votes the associated proxies since they
have first-hand in-depth knowledge of the company. In evaluating proxy issues, the analyst will utilize a
variety of sources to help come to a decision:
i. Information gathered through in-depth research and on-going company analyses performed by their
investment team in making buy, sell and hold decisions for their client portfolios. This process includes
regular external engagements with senior management of portfolio companies and internal discussions
with Portfolio Managers (“PMs”) and the Chief Investment Officer (“CIO”), as needed.
ii. ISS reports to help identify and flag factual issues of relevance and importance.
iii. Information from other sources, including the management of a company presenting a proposal,
shareholder groups, and other independent proxy research services.
iv. Where applicable, any specific guidelines designated in writing by a client.
Proxy Voting Committee
To help make sure that PIM votes client proxies in accordance with their fiduciary obligation to maximize
shareholder value, PIM has established a Proxy Voting Committee (“the Committee”) which is
responsible for overseeing the Voting Guidelines. The Committee consists of representatives from Legal
and Research, including their Chief Compliance Officer (“CCO”), Director of Research (“DOR”), and at
least one PM (who represents the interests of all PIM’s portfolio managers and is responsible for
17obtaining and expressing their opinions at committee meetings). The Committee will meet at least once
annually and as often as necessary to oversee their approach to proxy voting.
Is Pzena currently affected by any of the five conflicts listed by the PLSA (see notes) or any other
conflicts across any of its holdings?
According to their Proxy Voting Policy, potential conflicts include:
1. where Pzena manages assets for an account affiliated with
a. a publicly traded company,
b. an individual who is a corporate director or a candidate for a corporate directorship of a public
company
2. where a Pzena employee, director or immediate family member is a corporate director, or a candidate
for directorship of a public company
3. where Pzena manages the assets for a proponent of a shareholder proposal for a public company
Please include here any additional comments which are relevant to Pzena’s voting activities or
processes
No response
18Most significant vote – Vote 1: Exxon Mobil Corporation
Resolution: Report on Costs & Benefits of Climate-Related Expenditures
Approximate size of the fund’s holding as at the date of the vote: 1.02%
Guidance – Proxy: Not provided, Management: Not provided,
Action: For
Consider each environmental, social or corporate governance (ESG) proposal on its own merits.
Pzena believes that the company should disclose good quality data to help Pzena make an informed
decision on the valuation of their business, but Pzena would not want to place undue burden on the
company to its detriment relative to its peers. Also, Pzena would not want a company in which it has a
stake to be at a relative disadvantage to its peers. For example, if all the company’s peers are using
lobbyists to get their point across to lawmakers, Pzena would not want the company to be at a
disadvantage by not employing lobbyists themselves.
Pzena has deemed this vote to be significant based on the material financial impact on the longer-term
sustainability in the business and any material non-financial considerations.
Outcome: Supported Management
Most significant vote – Vote 2: JXTG Holdings, Inc. (now ENEOS)
Resolution: Elect Director Sugimori, Tsutomu
Approximate size of the fund’s holding as at the date of the vote: 0.39%
Guidance – Proxy: Not provided, Management: Against
Action: Against
Pzena has deemed this vote to be significant based on the material financial impact on the longer-term
sustainability in the business and any material non-financial considerations.
Outcome: Against management.
Pzena’s specific vote here has not had a material impact on board composition or behaviour at JXTG.
However, they view the ongoing discussion with management as critical to influencing outcomes at their
portfolio companies to maximize long term outcomes. Pzena have experienced some success at other
companies via private communications with management/board to influence the outcome on issues such
as capital return, buyback, etc.
Pzena has engaged JXTG on governance and strategic concerns that it holds. Pzena also wrote an email
/ letter to their board to outline some of its concerns.
19APP Global Equity Fund: Underlying fund 2:
Veritas Asset Management – Veritas Global Focus Fund
Voting Activities
• There were 486 eligible votes for the fund over the 12 months to 31 March 2021
• The manager exercised 100% of its votes over the year
• 8% of votes were against management and 1% were abstained
• 16% of votes were contrary to the proxy advisor’s recommendation
What is Veritas’s policy on consulting with clients before voting?
Veritas has a dedicated Global investment team that understands the businesses they invest in on behalf
of its clients. Veritas believe these are the best people to assess whether a company is good quality or
whether it is carrying out activities/practices that will be potentially detrimental to shareholders are its
investment analysts and Portfolio Managers.
Veritas will take third party views into consideration, such as Institutional Shareholder Services ("ISS"),
AMNT Red Lines, and questions raised by clients who utilise the services of proxy advisors, but reiterated
that the final decision of how to cast its vote rests with the Veritas investment team.
Please describe whether Veritas has made use of any proxy voter services
VAM LLP use Institutional Shareholder Services ("ISS"), for vote execution and policy application.
Please provide an overview of Veritas’s process undertaken for deciding how to vote
Veritas will receive all relevant proxies and the investment analyst will then determine if they believe that
Veritas should vote in favour or against management. After discussing with the Portfolio Manager and
making a final decision, the analyst will instruct the custodian or prime broker via the Operations Team
how to vote. This is done via ISS; the role of the Operations Team is to ensure that the voting of proxies
is done in a timely manner. The Role of the Chief Operating Officer (“COO”) is to monitor the
effectiveness of these policies.
Veritas uses ISS to execute voting on behalf of clients. Veritas has also mandated ISS to construct a
customized screen for various ESG issues which incorporates the AMNT Red Lines, on a best
endeavours basis. The AMNT Red Line Voting Policy contains 37 guidelines covering topics associated
with ESG. Should any of the 37 red lines be breached, the instruction is to either vote against
management or explain why not. Given this Red Line Voting Policy was developed principally for pooled
fund investors (who have been unable to direct votes) and for UK stocks only, Veritas has instructed ISS
to apply the guidelines globally where applicable and apply the policy across all clients.
The investment analysts will consider the guidelines and any research when making its decision. In the
case where a vote goes against a red line or where Veritas decides to vote against management, an
explanation will be provided in the reporting. On occasion, they may decide to vote against management
where the recommendation has been a vote in favour and again an explanation will be given.
Is Veritas currently affected by any of the five conflicts listed by the PLSA (see notes) or any other
conflicts across any of its holdings?
Veritas is not impacted by any of conflicts of interests listed.
Please include here any additional comments which are relevant to Veritas’ voting activities or
processes
No response provided.
20Most significant vote – Vote 1: Alphabet Inc.
Resolution: Establish Human Rights Risk Oversight Committee
Approximate size of the fund’s holding as at the date of the vote: 7.2%
Guidance – Proxy: Not provided, Management: Not provided
Action: For
Veritas voted in favour of this proposal because they believe continued controversies call into question
the extent to which the existing board structure provides adequate oversight on risks the company's
technologies present to human rights, which, in turn, creates risks for the company in terms of retaining
high-level employees and retaining a good reputation in the eyes of users and advertisers. Also, given the
pervasive role of Google in society this should be undertaken.
Veritas consider this a significant vote as the company represented 7.2% of the fund and as it believes
this vote may influence corporate governance practices.
Outcome: Proposal rejected with 84% majority.
Most significant vote – Vote 2: CVS Health Corporation
Resolution: Advisory vote to ratify named Executive Officer’s compensation
Approximate size of the fund’s holding as at the date of the vote: 3.1%
Guidance – Proxy: Not provided, Management: For
Action: Against
CVS Health proactively engaged with Veritas in October 2019 and ahead of the AGM to ensure they
understood the rationale for the pull forward of the PSU grant to Larry Merlo, CEO, and the new LTI
structure.
Veritas appreciated the engagement but continued to have the following concerns:
1) The adjusted EPS targets set by management (ratified by the board) were not rigorous or
stretching enough (c.5% CAGR)
2) The link to returns achieved by shareholders was not strong enough. The TSR is only a modifier
and 100% payout is achieved at only median performance. Whilst Veritas accept this can ratchet
up and down 25% if TSR is 75% percentile or 25% percentile respectively, it should be more
effectively incentivizing outperformance with a greater proportion of value associated with 75%
percentile performance or above.
3) The payments appeared egregious relative to both others in the industry and (as above) the
returns of shareholders in recent year.
Veritas consider this a significant vote given the increased engagement with the company and that this
vote may have a material impact on both long-term shareholder value creation and Corporate
Governance.
Outcome: Proposal rejected with 76% majority.
21APP UK Equity Fund: Underlying fund 1:
River and Mercantile (R&M) – River and Mercantile UK Equity High Alpha Fund
Voting Activities
• There were 4,147 eligible votes for the fund over the 12 months to 31 March 2021
• The manager exercised 95% of its votes over the year
• 5% of votes were against management andMost significant vote – Vote 1: GlaxoSmithKline
Resolution: Remuneration policy
Approximate size of the fund’s holding as at the date of the vote: 4%
Guidance – Proxy: Not provided, Management: For,
Action: Abstain
The incumbent US-based Executive Director's pension arrangements subsist at a level significantly
higher than that of the wider workforce, and there is no disclosed plan towards alignment over time. R&M
believes that an abstention (rather than a vote against) recognises that there is a plan towards alignment
for the UK-based Directors.
R&M believes this vote is significant due to the company’s large holding in the portfolio.
Outcome: 12% Against the resolution and against management. R&M explained it will continue to vote
against UK listed companies where executive pension contributions are not aligned with employees
Most significant vote – Vote 2: Lloyds Banking Group
Resolution: Remuneration report
Approximate size of the fund’s holding as at the date of the vote: 2%
Guidance – Proxy: Against, Management: For
Action: For
River and Mercantile were supportive of the proposal Long Term Share Plan because they believe it is a
good balance between issuing Restricted Shares (annually as a percentage of base, but with no
performance criteria) as advocated by the Norwegian sovereign wealth fund and an LTIP with
performance targets. With underpins linked to ROTE and a progressive dividend policy it incentivises
management to take into account return on capital considerations.
R&M believes this vote is significant due to the company’s large holding in the portfolio.
Outcome: 64% voted For the resolution.
The remuneration resolutions were passed with a majority of around 64%, however with a high
percentage of votes against it shows a number of shareholders are still not satisfied. There is further
scope to simplify, although R&M believe the inclusion and having a balance between financial and
‘transparent’ non-financial incentives linked to wider stakeholders is appropriate. R&M await to see what
the Remuneration Committee propose for next year. In light of the poor total shareholder return since the
Global Financial Crisis, R&M will be interested to see how important a TSR component might be.
23APP UK Equity Fund: Underlying fund 2:
Lindsell Train – Lindsell Train UK Equity Fund
Voting Activities
• There were 388 eligible votes for the fund over the 12 months to 31 March 2021
• The manager exercised 94% of its votes over the year
• 0% of votes were against management andmore favourable commercial terms with HL in relation to the sale and distribution of Lindsell Train
products.
Mitigating controls
• The investment decision making process and HL platform distribution relationship are clearly
segregated, with separate reporting lines up to Board level.
• Lindsell Train’s distribution agreement has been negotiated on an arms-length basis and on
normal commercial terms. HL has actually negotiated extremely competitive pricing on the funds
but equally not terms which that are exclusive to them.
• Lindsell Train will also carefully assess where any matters on which it is required to exercise its
voting authority presents a conflict with the business relationship that it has in respect of HL and
where a material conflict exists Lindsell Train will not vote.
Finsbury Growth and Income Trust & Lindsell Train Investment Trust (LTIT)
Finsbury Growth & Income Trust (FGIT) holds shares in LTIT where Lindsell Train is the investment
manager for both Funds. The decision to invest in LTIT was made by the FGIT Board of Directors for
investment and strategic reasons.
Mitigating controls
• Lindsell Train will not be allowed to buy or sell LTIT other than when receiving instructions from
FGIT Board.
• Lindsell Train will not cast its vote in respect of FGIT’s holdings in LTIT. The Board will be asked
to cast its vote and instruct Lindsell Train.
Lindsell Train Investment Trust (LTIT) holds shares in FGIT where Lindsell Train is also the investment
manager for both Funds. The decision to invest in FGIT was made by the LTIT Board of Directors for
investment and strategic reasons.
Mitigating controls
• Lindsell Train will not be allowed to buy or sell FGIT other than receiving instructions from LTIT
Board. Michael Lindsell who sits on the LTIT Board is precluded from making any investment
decisions due to the perceived conflict.
• Lindsell Train will not cast its vote in respect of LTIT’s holdings in FGIT. The Board will be asked
to cast its vote and instruct Lindsell Train.
Please include here any additional comments which are relevant to Lindsell Train’s voting
activities or processes
No response provided.
Most significant vote – Vote 1 - Unilever
Resolution: Cross-border merger
Approximate size of the fund’s holding as at the date of the vote: 9.7%
Note: Lindsell Train has provided approximate size of the fund’s holding as at the preceding month from the data of the vote.
Guidance – Proxy: Not provided, Management: For
Action: For
Lindsell Train is a long-term holder of consumer goods company, Unilever, having initiated a position in
the company in 2001. In 2018 it engaged extensively with management and other institutions regarding a
proposed modification to Unilever’s corporate structure. The proposed plans were abandoned at the
time. During Q2 2020 Unilever announced an about-face on the 2018 plan to move its headquarters to
Rotterdam, naming London as its proposed new home. Lindsell Train support the concept of a single
parent company that makes share-based acquisitions and demergers easier to undertake and also allows
25greater flexibility at a time when they are looking to management to use their balance sheet to capitalise
on post-pandemic opportunities.
Lindsell Train were pleased to once again engage with management on this matter and in this instance
support its proposed plans. It was deemed significant as it signals the end to an engagement that has
dated back to 2018 and has demonstrated the power of shareholders to protect their rights.
Outcome: In favour of management, For the resolution.
Most significant vote – Vote 2: Mondelez
Resolution: Advisory vote on Executive compensation
Approximate size of the fund’s holding as at the date of the vote: 9.0%
Guidance – Proxy: Not provided, Management: For
Action: Abstain
Lindsell Train pays careful consideration to the compensation policies of the companies in which it
invests. In assessing its compensation policies it focuses more on how incentives are structured rather
than the actual quantum of compensation. In other words it can be comfortable with large rewards
provided that the incentives are aligned with shareholders’ interests and its principles.
In the case for Mondelez, Lindsell Train did not believe that the company’s compensation policy was
aligned with the long-term best interests of the shareholders.
Lindsell Train deem this vote significant as they engaged with Mondelez's compensation committee
before the vote to signal their intentions to Abstain.
Outcome: In favour of management, For the resolution.
APP EM Equity Fund: Underlying fund 1:
Morgan Stanley Investment Management (MSIM) – Global Emerging Market Equity
Voting Activities
• There were 1,301 eligible votes for the fund over the 12 months to 31 March 2021
• The manager exercised 100% of its votes over the year
• 11% of votes were against management and 5% were abstained
• 5% of votes were contrary to the proxy advisor’s recommendation
What is MSIM’s policy on consulting with clients before voting?
MSIM does not consult with clients before voting securities held in pooled vehicles.
Please describe whether MSIM has made use of any proxy voter services
MSIM has retained Research Providers to analyse proxy issues and to make vote recommendations on
those issues. While MSIM review the recommendations of one or more Research Providers in making
proxy voting decisions, MSIM are in no way obligated to follow such recommendations. MSIM votes all
proxies based on its own proxy voting policies in the best interests of each client. In addition to research,
ISS provides vote execution, reporting, and recordkeeping services to MSIM.
26Please provide an overview of MSIM’s process undertaken for deciding how to vote
MSIM Affiliates will vote proxies in a prudent and diligent manner and in the best interests of clients,
including beneficiaries of and participants in a client’s benefit plan(s) for which the MSIM Affiliates
manage assets, consistent with the objective of maximizing long-term investment returns (“Client Proxy
Standard”). In addition to voting proxies at portfolio companies, MSIM routinely engages with the
management or board of companies in which MSIM invest on a range of environmental, social and
governance issues.
Is MSIM currently affected by any of the five conflicts listed by the PLSA (see notes) or any other
conflicts across any of its holdings?
Yes, across MSIM’s equity holdings there are occasions where the conflicts listed arise from time-to-time.
MSIM tracks these potential conflicts of interest and votes in line with the proxy voting policy or may
abstain to avoid any potential conflicts.
Please include here any additional comments which are relevant to MSIM’s voting activities or
processes
No response
27Most significant vote – Vote 1: PT Bank Rakyat Indonesia (Persero) Tbk
Resolution: Amend Articles of Amendment
Approximate size of the fund’s holding as at the date of the vote: 1.20%
Guidance – Proxy: Not provided, Management: Not provided
Action: Against
The proposal would limit shareholders' rights to review and vote on decisions on share repurchases in
significantly fluctuated market conditions of the company.
MSIM considers a vote against management significant.
Outcome: Passed
Most significant vote – Vote 2: Sino Biopharmaceutical Group Limited
Resolution: Approve issuance of Equity or Equity-Linked securities without pre-emptive rights.
Approximate size of the fund’s holding as at the date of the vote: 0.64%
Guidance – Proxy: Not provided, Management: For
Action: Against
Excessive dilution and the company has not specified a discount limit
MSIM considers a vote against management significant.
Outcome: Passed
APP EM Equity Fund: Underlying fund 2:
GW&K (formerly called Trilogy) – Emerging Markets Equity
Voting Activities
• There were 957 eligible votes for the fund over the 12 months to 31 March 2021
• The manager exercised 100% of its votes over the year
• 15% of votes were against management and 6% were abstained
• 0% of votes were contrary to the proxy advisor’s recommendation
What is GW&K’s policy on consulting with clients before voting?
Where clients have delegated proxy voting authority to GW&K, it has implemented proxy voting policies
and procedures designed to reasonably ensure that its votes proxies in the best interest of clients. In
voting proxies, GW&K seeks to maximize the long-term value of client assets. Upon request, GW&K will
provide clients these proxy voting policy and procedures, and information about how proxies were voted
on their behalf. In cases where a client has delegated proxy voting authority to GW&K but would like to
direct its vote on a particular proxy solicitation, the client may contact GW&K to instruct its vote
accordingly.
28Please describe whether GW&K has made use of any proxy voter services
As mentioned above, GW&K has adopted proxy voting guidelines developed by Glass Lewis & Co., an
independent third-party service provider, which provides recommendations on ballot items for securities
held in client accounts. Proxies are voted on behalf of GW&K's clients (who have delegated proxy voting
authority) in accordance with those guidelines. GW&K reserves the right to cast votes contrary to Glass
Lewis guidelines if it deems it necessary and in the best interest of its clients.
GW&K has contracted with Broadridge Financial Solutions, an independent third party service provider, to
act as proxy voting agent and to provide proxy voting services, including:
1) Conduct in-depth proxy research;
2) Process and vote proxies in connection with securities held by GW&K’s clients;
3) Maintain appropriate records of proxy statements, research, and recommendations;
4) Maintain appropriate records of proxy votes cast on behalf of GW&K’s clients;
5) Complete other proxy related administrative functions.
Please provide an overview of GW&K’s process undertaken for deciding how to vote
As a registered investment adviser and fiduciary to its clients, GW&K has implemented its Proxy Voting
Policy to establish internal controls and procedures governing the firm’s review and voting of proxies on
behalf of client accounts. To assist in the process, GW&K leverages recognized third-party service
providers to facilitate the firm’s proxy voting process. GW&K has adopted proxy voting guidelines
developed by Glass Lewis & Co., which provides recommendations on ballot items for securities held in
client accounts. GW&K has also retained Broadridge Financial Solutions as proxy voting agent and to
provide related proxy voting services.
Glass Lewis and Broadridge assist GW&K by conducting in-depth proxy research; processing and
executing proxies in connection with securities held by GW&K’s clients; maintaining records of proxy
statements, research, and recommendations; maintaining records of proxy votes cast on behalf of
GW&K’s clients; and completing other proxy related administrative functions.
GW&K has established a Proxy Voting Committee to oversee the firm’s proxy voting process, including
the firm’s Proxy Voting Policy, the firm’s service providers and the proxy voting guidelines. In addition,
the Committee would address any potential conflicts of interest that are identified by GW&K with respect
to voting any specific proxy ballot item. The Committee is comprised of GW&K’s Chief Compliance
Officer, General Counsel, managers of GW&K’s Investment Operations and Client Services teams,
members of the Legal & Compliance team, as well as certain GW&K Portfolio Managers. The Committee
meets annually, and more frequently as needed.
In instances when a proxy ballot item does not fall within the Glass Lewis guidelines or where GW&K
determines that voting in accordance with the Glass Lewis recommendation is not advisable or consistent
with GW&K’s fiduciary duty, GW&K’s portfolio managers, with the support of GW&K’s Legal &
Compliance team and other personnel, will review the relevant facts and circumstances and determine
how to vote the particular proxy ballot item. Please see GW&K's Proxy Voting Policy for further details.
Is GW&K currently affected by any of the five conflicts listed by the PLSA (see notes) or any other
conflicts across any of its holdings?
1) Due to the nature of their clientele, GW&K does from time to time trade in securities issued by clients
or the companies that employ or otherwise engage their clients. For example, some GW&K clients are
board members, senior executives or employees of publicly traded companies. In addition, they manage
assets for publicly traded companies, the securities of which they may purchase from time to time for their
investment strategies. They only purchase securities for their clients if the company passes their
investment screening process and they believe that owning the shares would benefit their clients. In all
such instances, GW&K will act in what they believe are the best interests of their clients. GW&K will make
investment decisions for client accounts independently and not on the basis of whether the security
issuer, or an employee or other associate of the issuer, is a client of GW&K. Please see below in relation
to GW&K’s further efforts to address potential conflicts of interest relating to proxy voting.
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