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Colonial First State Global Asset Management (including First State Investments)

PRI reporting framework 2016

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(Proxy) voting and shareholder resolutions

Overview

LEA 17. Voting policy & approach

17.1. Indicate whether your organisation has a formal voting policy.

17.2. Indicate what your voting policy covers:

other description

          We have an engagement and proxy voting policy and Global Stewardship Principles. In addition they  cover the escalation of engagements.
        

17.3. Please attach or provide a URL to your voting policy. [Optional]

17.4. Provide a brief overview of your organization’s approach to (proxy) voting (including the filing and/or co-filing of shareholder resolutions if applicable).

Proxy voting rights are an important part of shareholder responsibility and we seek to vote on all possible resolutions at company meetings. Prior to voting, the relevant investment manager and analyst carefully consider each resolution, with guidance provided by our ‘Guidelines and principles for corporate engagement on governance, environment and social issues’.

Recommendations from a selection of independent corporate governance research providers are also sought. Our investment teams retain full control over their proxy voting decisions, however, and do not necessarily follow the guidance provided by third party governance research providers.

All teams have an approval and escalation process for proxy votes and maintain records when they vote against management or against the recommendations of the proxy voting adviser.

We see proxy voting as an extension of our engagement activities and will take the company's individual circumstances and willingness to engage into account when making decisions. We do not require different teams to vote the same way on specific resolutions.

We have not filled or co-filled a shareholder resolution but would consider such measures should we believe it was the most effective way to bring about change in an investee company.

17.5. Additional information [optional]

 

 


Process

LEA 18. Typical approach to (proxy) voting decisions

18.1. Indicate how you typically make your (proxy) voting decisions and what this approach is based on.

Approach

Based primarily on

          We provide proxy guidelines and use proxy advisers however decisions are made by the teams. See additional information.
        

18.2. Additional information.[Optional]

As described above we provide proxy voting guidelines at a firm level however will take the company’s individual circumstances and willingness to engage into account when making decisions. We do not require different teams to vote the same way on specific resolutions. With oversight from the head of each investment team we believe this is the best way to conduct long-term and ongoing engagement with companies.


LEA 19. Percentage of voting recommendations reviewed (Not Applicable)


LEA 20. Confirmation of votes

20.1. To ensure that your (proxy) votes are cast and reach their intended destination on time, indicate if you do the following.

20.2. Provide additional information on your organisation’s vote confirmation efforts.

Due to the external administrative processes to deliver proxy votes to companies we not currently receive explicit confirmation that a company has counted our votes, although we do receive confirmation that the votes have been properly lodged. Should a voting outcome seem incorrect we would engage with the company on the vote to understand what had occurred.


LEA 21. Securities lending programme

21.1. Indicate if your organisation has a securities lending programme.

21.3. Please explain the rationale behind not having a securities lending programme

We do not believe it is in the best interests of our clients to loan shares to other investors who wish to bet against their positions. We also are concerned that issues may prevent shares being properly recalled for voting purposes. 

21.4. Additional information.


LEA 22. Informing companies of the rationale of abstaining/voting against management

22.1. Indicate if you ensure that companies are informed of the rationale when you and/or the service providers acting on your behalf abstain or vote against management recommendations.

          Where management or the board have requested an indication ahead of time.
        

22.2. Additional information. [Optional]

Three investment teams reported that they inform companies in all cases of reasons for against or abstain votes while four teams reported that they inform companies in some cases, in particular on certain issues. Importantly as we view proxy voting as an extension of each investment team’s engagement activities issues which result in negative votes are generally addressed in regular interactions with companies rather than as a separate formal process.


Outputs and outcomes

LEA 23. Percentage of (proxy) votes cast

23.1. For listed equities where you and/or your service provider have the mandate to issue (proxy) voting instructions, indicate the percentage of votes cast during the reporting year.

Votes cast (to the nearest 1%)

99 %

Specify the basis on which this percentage is calculated

23.2. If there are specific reasons why you did not vote certain holdings, explain these, and if possible, indicate the percentage of holdings affected by these factors. [Optional]

We do not vote in share blocking markets, however we are implementing a process change which would allow a portfolio manager to vote shares in share blocking markets if they do not intend to trade the stock during the blockout period. 

Our smart beta team Realindex have very diversified portfolios which distort the voting numbers for the remainder of teams as they were responsible for 68% of total votes in 2015.

Realindex and our Multi Asset Team's vote in line with the recommendations of our proxy advisor in most instances.

Due to our current policy of not voting in share blocking markets the Realindex team's unvoted shares account for 95% of all unvoted shares. 

For these reason we have excluded RealIndex and Multi Asset from the above voting figure, had we included them the number would have been 93%,

23.3. Additional information. [Optional]


LEA 24. Proportion of ballot items that were for/against/abstentions

24.1. Indicate if you track the voting instructions that you and/or your third party have issued on your behalf.

24.2. Of the voting instructions that you and/or third parties have issued on your behalf, indicate the proportion of ballot items that were:

Voting instructions
Breakdown as percentage of votes cast
For (supporting) management recommendations
94 %
Against (opposing) management recommendations
5 %
Abstentions
1 %
100%

24.3. For the reporting year, describe your approach towards voting on shareholder resolutions.

Each team vote all resolutions individually and on their merits. In 2015 we supported 25% of shareholder resolutions.

24.4. Additional information. [Optional]

"For" votes do not always mean supporting management recommendations as implied by the question, as 'for' is a vote in favour of a resolution which management may not support. In the cases of shareholder resolutions management often recommends voting 'against' the resolution and so a vote 'for' would be voting against management's recommendation. Additionally for some other resolutions management will recommend not to vote, abstain or are silent. 

For the purposes of answering the question we have included votes where we voted 'for' or 'against' the resolution.


LEA 25. Shareholder resolutions

25.1. Indicate if your organisation directly or via a service provider filed or co-filed any shareholder resolutions during the reporting year.

25.6. Additional information. [Optional]


LEA 26. Examples of (proxy) voting activities

26.1. Provide examples of the (proxy) voting activities that your organisation and/or service provider carried out during the reporting year.

Topic or ESG issue
          Hyundai Mobis - Election of Directors
        
Decision made by
Objectives

Vote against directors not acting independently

Scope and Process

Board failed to veto US$10bn purchase of property from the government last year, which is not related to its core business.

Outcomes

Vote against board members which was against management's recommendation. 

Topic or ESG issue
          NEXTDC Limited - Remuneration report
        
Decision made by
Objectives

Remove inappropriate remuneration practices

Scope and Process

The CEO’s total pay package, which is predominately cash based, is too large to support. In FY15 his cash pay accounted for ~41% of the total executive KMP cash expense and his total pay accounted for ~10% of the group employee benefits expense.

Outcomes

We have voted AGAINST the remuneration report which was against management and the proxy advisor's recommendation. 

Topic or ESG issue
          Gold Road Resources Limited - Grant of options to directors
        
Decision made by
Objectives

Prevent inappropriate grants to directors

Scope and Process

Resolutions are asking for the grant of options to non-executive directors, which can impair independence. If these options are granted, the entire board will be classified by this report as non-independent. 

Outcomes

Voted against which was against management and proxy advisor's recommendation. 

Topic or ESG issue
          Great-West Lifeco Inc.- Director election
        
Decision made by
Objectives

Require director attendance

Scope and Process

Director had less than 75% attendance and serves on too many boards 

Outcomes

Voted against director relection which was against management's recommendation. 

Topic or ESG issue
          Hokkaido Electric Power Co. Inc - Shareholder Proposal Regarding Individual Compensation Disclosure
        
Decision made by
Objectives

Better disclosure of remuneration

Scope and Process

Information provided by this proposal could allow shareholders to better determine whether an individuals' compensation is reasonable. 

Outcomes

Voted for the resolution which was against management's recommendation.

Topic or ESG issue
          Diligent Board Member Services Inc. - Director election
        
Decision made by
Objectives

Elect more independent directors

Scope and Process

The company has neither appointed an independent chairman nor a independent lead. The director is the most senior member of the nominations committee elected by common shareholders, we feel he bears responsibility to the shareholders of the Company's common stock to ensure some form of independent leadership on the board. 

Outcomes

Against the election of teh director which was against management's recommendation. 

Topic or ESG issue
          Lundin Mining Corp. - Director election
        
Decision made by
Objectives

Retain valuable directors. 

Scope and Process

We acknowledge the proxy advisors concerns regarding directors attendance and will raise this directly with the company, although do not believe it warrants withholding a vote for a valuable contributor to the overall governance of this company. 

Outcomes

Voted for the director which was against proxy advisor's recommendation. 

Topic or ESG issue
          Trevali Mining Corp - director elections
        
Decision made by
Objectives

Ensure directors are contributing appropriately to the board.

Scope and Process

The team engaged with the company on the matters of director X's (attendance <75%) and Y's (overboarded).  the team was satisfied with the company’s responses and therefore are voting for their re-elections to the board. 

Outcomes

Voted for the directors' election whiach was against the proxy advisor's recommendation. 

Topic or ESG issue
          News Corp - Advisory Vote on Executive Compensation
        
Decision made by
Objectives

Vote against excessive remuneration 

Scope and Process

Executive pay is to high for the actual operating businesses fully owned and run.

Outcomes

Voted against which was against management and proxy advisor's recommendation. 

Topic or ESG issue
          Highfield Resources Limited - Remuneration Report
        
Decision made by
Objectives

Vote against excessive remuneration 

Scope and Process

Executives receive consultancy fees (with $556,147 worth of reimbursement expenses and allowances, paid primarily to the CEO, not included in the audited remuneration table) and options which generally vest after one year or less – there is no long-term performance linked element. Non-executive directors also receive options in addition to their cash fees.

Outcomes

Vote against which was against management and proxy advisor's recommendation. 

26.2. Additional information. [Optional]

We have selected the above examples to demontsrate the careful consideration and independance of the investment teams when voting. We publish our full proxy voting record biannually which can be downloaded from our webiste at:  http://www.firststateinvestments.com/uploadedFiles/Content/About_Us/Responsible_investment/RI_reports/CFSGAM-RI-Report-15.12-Proxy%20voting_30-Jun-2015_FULL.pdf


Communication

LEA 27. Disclosing voting activities

27.1. Indicate if your organisation proactively discloses information on your voting activities.

27.2. Indicate if the information disclosed to the public is the same as that disclosed to clients/beneficiaries.

27.3. Indicate the voting information your organisation proactively discloses to the public.

Indicate how much of your voting record you disclose

Indicate what level of explanation you provide

27.4. Indicate how frequently you typically report voting information to the public.

27.5. Indicate the voting information your organisation proactively discloses to clients/beneficiaries.

Indicate how much of your voting record you disclose

Indicate what level of explanation you provide

27.6. Indicate how frequently you typically report voting information to clients/beneficiaries.

27.7. Describe any other differences in the information being disclosed. [Optional]

Proxy voting reports provided to clients occur in line with the relevant investment management agreements which can range from monthly to not at all (in which case clients are advised of public disclosures as they occur)

Some clients receive notifications of votes as they are submitted and prior to the deadline so they can override them should they choose to. Other clients request information on specific votes including the rationale for our voting decision.

Most clients require information on proxy voting for their regular assessment process/questionnaires.

27.8. Additional information. [Optional]


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