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Legal & General Investment Management (Holdings)

PRI reporting framework 2018

Export Public Responses

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Outputs and outcomes

LEA 21. Percentage of (proxy) votes cast

21.1. 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%)

97 %

Specify the basis on which this percentage is calculated

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

21.3. Additional information. [Optional]

At LGIM, we vote in all major developed markets and the main emerging markets, covering c.97% of the FTSE All-World Index constituents by market capitalisation.

However, there are certain circumstances which cause us not to vote all of our holdings. This includes:

  • stock lending (in the countries where we lend stock between 5 - 15% of shares held back will be voted unless we recall the stock). We do not lend stock in the UK.
  • Non-voting shares held
  • Restrictions on voting by foreign nationals
  • Changes to power of attorney requirements.

In the US and Canada in proxy contests (which are rare and different to the normal filing of shareholder resolutions), shareholders have a choice between two proxy cards - one proposed by the management of the company and one proposed by a shareholder. Therefore, whichever one we choose not to vote on, a "Do Not Vote" is instructed. This is an active decision, since we would have chosen to vote (support) the other proxy card.

We also aim to minimise abstentions to make proper use of our voting powers. We have not abstained in any market in over 6 years, unless it was technically not possible to vote. In fact those rare cases only amount to 0.15% of total votes (73 out of 46,446) in 2017 and 0.09% of votes in 2016.

LEA 22. Proportion of ballot items that were for/against/abstentions

22.1. Indicate if you track the voting instructions that you and/or your service provider on your behalf have issued.

22.2. 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
86.97 %
Against (opposing) management recommendations
12.89 %
0.14 %

22.3. Describe the actions you take in relation to voting against management recommendations.

          A decision to vote against management may be the consequence of unsuccessful engagement as part of our escalation strategy described in question LEA 01.4. However, given the scale of our holdings, we do not have the capacity to engage with all the companies we hold. We therefore may cast votes against management where companies do not  align with our voting policies which take into account market best practice and our clients’ expectations.
Voting forms a key part of the corporate governance team’s monitoring process. All our votes are recorded and are easily accessible by the team, including the rationale. Before a voting decision is made the team can consult LGIM’s past votes which helps us in monitoring change. LGIM’s proprietary ESG tool incorporates voting decisions. This helps us in flagging the laggards for which we have already undertaken action, and for which we would consider escalating further our engagement. 
Communicating our votes to companies
As explained in question LEA 20.3 we communicate our votes to companies in advance of shareholder meetings in the following cases only:
•	Escalation of engagement
Where engagement does not produce satisfactory results, we escalate our position and may decide to make our voting decision public prior to the shareholder meeting. We find this is an efficient way for us to draw public attention to our concerns.
•	As part of a specific engagement programme
LGIM’s Climate Impact Pledge is a public engagement programme on climate change. After one year of engagement, if companies fail to meet LGIM’s minimum expectations, for all funds LGIM manages where we are unable to contractually divest, we will vote against the chair of the board of the same companies. We are aiming to make the list of companies public. This will involve disclosing our vote intention for some, if not all of them, prior to their shareholder meeting.

After shareholder meetings, we publicly disclose all our votes for the major markets on our website in our monthly voting reports. These reports also now include our vote rationales for all our votes against management.  This allows companies to be informed of our voting decisions and the reasons for our votes against.
These reports are available at:
Communicating our votes internally
Final voting decisions on index assets are always made by the corporate governance team in coordination with and  independently from investment and client teams.  As explained in question LEA 04.4 and 9.2, LGIM’s corporate governance and investment teams regularly exchange information and specific company insights regularly including votes when of interest for the investment teams. Note that, as mentioned above, voting decisions are incorporated into our proprietary ESG tool and that this tool is available to share amongst all investment professionals within LGIM by having direct access to them on an LGIM-wide, custom Bloomberg sharing platform.

22.4. Additional information. [Optional]

LEA 23. Shareholder resolutions (Private)

LEA 24. Examples of (proxy) voting activities (Private)