The 3 mechanisms that PM CAPITAL will use to manage conflicts of interest will involve one or a combination of the following:
1. controlling conflicts of interest
- Identifying - report the actual, apparent or potential conflict of interest to the Compliance Officer in the first instance.
- assess and evaluate - determine in each case if the conflict:
- 1. can be controlled; and
- 2. should be disclosed; or
- 3. should be avoided.
- Implement an appropriate response:
- disclose conflict;
- provide an alternative source of service to a client or member;
- initiate internal disciplinary action; or
- take any other action the Compliance Officer, CEO, or the Board, considers appropriate
- Monitoring Conflicts Management
- Compliance Officer will maintain a Conflict of Interest register
- Compliance Measures - keep compliance monitoring records
- Records - at least 7 year
2. avoiding conflicts of interest; and
3. disclosing conflicts of interest.
PM CAPITAL has a reputation for encouraging good ESG practices and we regularly engage the management of the companies that we own around the continuous improvement of ESG practices.
Failing a suitable outcome, we are happy to approach the boards of listed companies directly, as well as taking our case to the press.
We will generally oppose proposals where we see:
§The election of inappropriate directors, particularly where there is not a majority of independent directors or where there has been excessive turnover of board / senior executives
§Excessive management remuneration arrangements, or a lack of alignment between executive incentive structures and a company’s operating performance
§The appointment of auditors who are not independent.
Agitating for change in this way helps us to unlock the inherent value in a company in order to achieve a better outcome for our investors.
One example involved Austar which, as part of their Employee Share Plan, provided $43 million in interest-free loans to 13 senior managers and an $8.2 million interest-free loan to their chief executive.
As a minority shareholder, we were unable to block the employee share plan and so raised our concerns with management. We then voiced our views in the press to ensure that the new Employee Share Plan had more appropriate incentives in place.