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Perennial Value Management Limited

PRI reporting framework 2017

You are in Direct - Listed Equity Incorporation » Outputs and outcomes

Outputs and outcomes

LEI 14. How ESG incorporation has influenced portfolio composition

14.1. Indicate how your ESG incorporation strategies have influenced the composition of your portfolio(s) or investment universe.

Select which of these effects followed your ESG integration:

14.2. Additional information.[Optional]

LEI 15. Measurement of financial and ESG outcomes of ESG incorporation

15.1. Indicate whether your organisation measures how your approach to ESG issues in listed equity investments has affected financial and/or ESG performance.

15.2. Describe how you are able to determine these outcomes.

LEI 16. Examples of ESG issues that affected your investment view / performance

16.1. Provide examples of ESG issues that affected your investment view and/or performance during the reporting year.

ESG issue and explanation

We engaged with Clydesdale Bank in relation to their remuneration policies. We were please by both the approach being taken to executive remuneration which centred on a balanced scorecard of “risked” measures as opposed to simple earnings per share or total shareholder return metrics as well as the way they were proactively seeking out shareholder feedback prior to finalising the remuneration structure and believe this should set an example for other companies.

Impact on investment decision or performance

ESG issue and explanation

Earlier in the year, we wrote to the Board of Ansell regarding their executive remuneration policy. Our strong preference was to adopt an approach which combined hurdles tailored to company and sector specific financial metrics, earnings per share targets, and return on capital targets, and to exclude the commonly adopted total shareholder return (TSR) metric. The key reason for this is that share prices may not reflect the underlying performance of the business in the short to medium term. Pleasingly, during the quarter, Ansell advised changes to its executive remuneration framework and adopted all of our recommended changes.

Impact on investment decision or performance

16.2. Additional information.[Optional]