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Sparinvest S.A.

PRI reporting framework 2017

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(Proxy) voting and shareholder resolutions

Overview

LEA 17. Voting policy & approach

New selection options have been added to this indicator. Please review your prefilled responses carefully.

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

17.2. Indicate what your voting policy covers:

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

17.4. Provide a brief overview of your organization’s approach to (proxy) voting.

Sparinvest votes in accordance with its internal voting policy. We receive voting related research from proxy voting service provider ISS, and perform a triage of agenda items, considering the agenda, our voting policy, and the ISS analysis. Where a vote against an agenda item appears appropriate, or the matter is complex or controversial, the matter is referred to the relevant Portfolio Manager for a final decision. The voting instruction is then executed in line with our internal decision, via the ISS platform. An automated voting monitoring system from our proxy services provider enables us to ensure that votes have been cast according to our instructions. 

Votes are blunt tools, which we believe are more powerfully exercised in conjunction with dialogue. We seek to engage with companies where we vote against management recommendation. Where possible, this is done before our vote instruction, but the realities of a hectic proxy voting voting season mean that in some cases the communication follows the voting instruction. Outcomes can include the company amending the agenda to our satisfaction, a change in our voting decision based on new information from the company, or a vote against the item followed by further dialogue.

17.5. Provide an overview of how you ensure your voting policy is adhered to, giving details of your approach when exceptions to the policy are made (if applicable).

An automated voting monitoring system from our proxy services provider enables us to ensure that votes have been cast according to our instructions. We regularly monitor that we are voting our shares.

Our voting policy consists of various specific principles, but note that we consider all situations on a case-by-case basis, and voting decisions may deviate from certain principles where dictated by the best interests of our investors. In this respect, it is important to note that we do not view voting as a standalone issue, but rather as being inherently linked to dialogue. It some cases, it may be that when taken in the context of our engagement with a company, we may choose to vote in favour on an item that we may otherwise have opposed. An example would be where we are encouraging the company to increase board independence levels, and are aware of serious efforts by the company to find suitable independent candidates, but where a suitable candidate has not been found in time for the current AGM: in such a situation, where our thoughts on board structure have already been made clear to the company, and serious efforts are underway, we may prefer not to cause unnecessary disruption by voting against current board candidates, but instead choose to abstain, or even to support, the current candidates – but on the clear understanding that this may change if the expected progress is not delivered in the near future.

The head of responsible investment reviews a sample of voting decisions to ensure compliance with the voting policy.


Process

LEA 18. Typical approach to (proxy) voting decisions

18.1. Indicate how you typically make your (proxy) voting decisions.

Approach

Based on

18.2. Additional information.[Optional]

Our guiding principle is to serve the long-term interests of the investors in the optimal manner. Sparinvest receives external advice from the proxy advisory company Institutional Shareholder Services (ISS), but voting decisions are made on a case-by-case basis at the discretion of Sparinvest’s investment team, and will not necessarily follow ISS advice. In this regard, we are keen to have a constructive dialogue with the companies in which we invest.

Sparinvest subscribes to the below list of general principles. However, we consider all situations on a case-by-case basis, and voting decisions may deviate from the below principles where dictated by the best interests of our investors. Furthermore, there may be situations where certain principles appear contradictory to other principles; in such cases, as always, Sparinvest expects management to work in the best interests of long-term shareholders.

  • One-share, one-vote
  • The rights of minority shareholders should be well protected.
  • Shareholders should be provided with reasonable opportunities to propose shareholder resolutions
  • Decisions on capital employment and the distribution of capital should be taken in the best interests of long-term share-holders.
  • ‘Poison pills’ and other defense measures should generally be avoided.
  • Companies should generally aim to be transparent.
  • Accounts should be audited by independent external auditing firms, whose other relationships with the company cannot be considered to impair that independence.
  • A transparent remuneration policy should align the interests of management with those of long-term shareholders.
  • The board, and committees on remuneration, nomination and auditing, should predominantly consist of independent members.
  • Subject to the above principles, companies should aim to comply with local corporate governance standards, or explain non-compliance.

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


LEA 20. Confirmation of votes (Private)


LEA 21. Securities lending programme (Private)


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

New selection options have been added to this indicator. Please review your prefilled responses carefully.

22.1. Indicate whether you or the service providers acting on your behalf raise any concerns with companies ahead of voting

          While the aim is to raise concerns ahead of voting the realities of a hectic proxy season are such that it is not possible in all cases and therefore some communication comes after the voting.
        

22.2. Indicate whether you and/or the service provider(s) acting on your behalf, communicate the rationale to companies, when , you abstain or vote against management recommendations.

22.3. Additional information. [Optional]


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%)

72 %

Specify the basis on which this percentage is calculated

23.2. Explain your reason(s) for not voting certain holdings

23.3. Additional information. [Optional]

Whereas our voting on actively-managed fundamental funds is around 98%, our policy with regard to our passive/index funds (as agreed with clients) is one of only voting on companies in which we have a significant holding (current threshold EUR 1 million). This results in a lower overall total voting percentage across all listed equities owned. Market demand for passives is based largely on their low charges and thus our active ownership policy for passives is a trade-off between our understanding of what clients currently want and increasing industry demand for voting across all passive holdings. We are monitoring the situation.


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 service provider on your behalf have issued.

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

Voting instructions
Breakdown as percentage of votes cast
For (supporting) management recommendations
89 %
Against (opposing) management recommendations
10 %
Abstentions
1 %
100%

24.3. Describe the actions you take after voting against management recommendations.

          Votes are blunt tools, which we believe are more powerfully exercised in conjunction with dialogue. We seek to engage with companies where agenda items breach our voting policy or are contentious for other reasons. Where time permits, this happens before the ballot. Outcomes can include the company amending the agenda to our satisfaction, a change in our voting decision based on new information from the company, or a vote against the item followed by further dialogue.
        

24.4. Additional information. [Optional]


LEA 25. Shareholder resolutions (Private)


LEA 26. Examples of (proxy) voting activities (Private)


Communication

LEA 27. Disclosing voting activities

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

provide URL

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 and/or to clients/beneficiaries.

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.

27.8. Additional information. [Optional]


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