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Wellington Management Company LLP

PRI reporting framework 2018

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(Proxy) voting and shareholder resolutions

Overview

LEA 15. Voting policy & approach

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

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

15.2. Indicate what your voting policy covers:

other description

          Record keeping
        

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

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

Proxy voting is a powerful tool for investors, and we vote proxies on our clients’ behalf in a manner that we believe maximizes the economic value of their holdings. Importantly, we do not automatically vote proxies either with management or in accordance with the recommendations of third-party proxy providers. We vote according to our own Global proxy voting guidelines. While these guidelines set forth general guidance for voting proxies, we evaluate each proposal on its merits.

Our Global Proxy Voting Guidelines are available on our public website: https://www.wellington.com/en/global-proxy-policy-and-voting-guidelines

The Investment Stewardship Committee oversees all activities related to proxy voting and the integration of Environmental, Social, and Governance (ESG) considerations in the management of client portfolios, and the ESG Research Team reports to the Investment Stewardship Committee quarterly regarding the firm’s proxy voting activities. The committee includes senior-level and experienced professionals from portfolio management, investment research, relationship management, and legal and compliance globally.


Process

LEA 16. Typical approach to (proxy) voting decisions

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

Approach

Based on

16.2. 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).

The Investment Stewardship Committee oversees all activities related to proxy voting and the integration of Environmental, Social, and Governance (ESG) considerations in the management of client portfolios, and the ESG Research Team reports to the Investment Stewardship Committee quarterly regarding the firm’s proxy voting activities. The committee includes senior-level and experienced professionals from portfolio management, investment research, relationship management, and legal and compliance globally.

16.3. Additional information.[Optional]

While the ESG Research team provides proxy voting recommendations on contentious votes, the portfolio manager for the client account has the authority to decide the final vote in the best interest of client portfolios, absent a material conflict of interest. In addition, there is no “house vote”. Our proxy voting system allows different votes to be submitted for the same security. Our firm is organized as a collection of portfolio teams — each with its own unique investment philosophy, approach, and time horizon. Consistent with this structure, various portfolio managers holding the same securities may arrive at different voting conclusions for their clients’ proxies.


LEA 17. Percentage of voting recommendations reviewed (Not Applicable)


LEA 18. Confirmation of votes

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

18.1. Describe your involvement in any projects to improve the voting trail and/or to obtain vote confirmation .

          The firm periodically reviews its position regarding specific proxy issues. In addition, the firm’s Global Proxy Policy and Procedures and Proxy Voting Guidelines are reviewed annually by our Investment Stewardship Committee and updated as necessary. 

Wellington conducts on-site due diligence visits at the offices of Glass Lewis at least annually. We review Glass Lewis’ written compliance policies and procedures on an annual basis. On a weekly and monthly basis, Wellington Management reviews ballot reconciliation reports to ensure that accounts with proxy voting rights are properly set up and that we are properly voting on behalf of our clients. The Proxy Support team has a bi-weekly standing call scheduled with our contacts at Glass Lewis to resolve any outstanding items. Finally, we review proxy voting reports as generated by Glass Lewis’ ViewPoint system to ensure votes cast are properly executed and record kept.
        

18.2. Additional information. [OPTIONAL]

          
        

LEA 19. Securities lending programme

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

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

19.2. Describe why your organisation does not lend securities?

Wellington Management does not offer a securities lending program; however, the firm has no concerns about and would raise no objection to client participation in an appropriately structured securities lending program, on the assumption that it would not impact our portfolio management decisions. In fact, we assume that many of our clients are active in this market, although we are not directly involved.

19.4. Additional information.

          
        

LEA 20. 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.

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

20.2. 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.

20.3. Additional information. [Optional]


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%)

98 %

Specify the basis on which this percentage is calculated

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

          In certain instances, Wellington Management may be unable to vote or may determine not to vote a proxy on behalf of one or more clients. For example, we may be unable to vote proxies when the underlying securities have been lent out pursuant to a client’s securities lending program. In general, Wellington Management does not know when securities have been lent out and are therefore unavailable to be voted. Efforts to recall loaned securities are not always effective, but, in some circumstances, Wellington Management may recommend that a client attempt to have its custodian recall the security to permit voting of related proxies. Another instance when we may refrain from voting is when the cost of voting outweighs the value of the vote. For example, we typically do not vote in share blocking markets, where countries impose trading restrictions or requirements regarding re-registration of securities held in omnibus accounts in order for shareholders to vote a proxy. The consequences of such requirements – including the potential impact on liquidity – are evaluated on a case by case basis when determining whether to vote such proxies.
        

21.3. Additional information. [Optional]

We may refrain from voting where the cost of voting outweighs the value of the vote. For example, we typically do not vote in share blocking markets, or on securities that are on loan. In share blocking markets shareholders are unable to trade their stock from the day they vote their proxies until the day after the shareholders meeting. Vote deadlines are typically 7-10 days prior to the meeting in such countries, implying that the stock is illiquid for a period of time. We therefore decline to vote in these countries unless the issue has such clear and quantifiable value that we are willing to sacrifice liquidity.


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
92 %
Against (opposing) management recommendations
7 %
Abstentions
1 %
100%

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

          Votes for or against management are made in the context of our voting process, which is governed by the firm’s Global Proxy Policy and Procedures and Global Proxy Voting Guidelines. The policy is written to support the best economic interest of the client, in accordance with regulatory and fiduciary requirements.

The firm examines each proxy proposal and votes against issues that we believe would have a negative effect on shareholder rights or the current or future market value of the company’s securities. The analyst who covers the stock or the Portfolio Manager who owns the stock may be consulted for company specific recommendations, particularly when the policies do not address the issues to be voted.

Occasionally, in the course of voting on specific proxy issues, potential conflicts may arise between the interests of clients and Wellington Management. Because Wellington Management has a fiduciary obligation to resolve such potential conflicts solely in the long-term interest of clients, the firm has established policies and procedures designed to resolve potential conflicts of interest, and these procedures can be found in the firm’s Proxy Policies and Procedures.

Pursuant to the referenced Proxy Policies and Procedures, potential conflicts may be resolved by votes in accordance with our published Proxy Voting Guidelines document. Alternatively, where the published voting guideline is “case-by-case,” where no published guideline exists, or where the proposed voting position is contrary to a published guideline, two disinterested ombudsmen from the Investment Stewardship Committee are appointed to review the recommendations of the ESG Research Team, oversee any discussion or debate with respect to the proposed votes, attend any meetings with the company or other outside parties with an interest in the matter, and to certify that the voting process and ultimate votes were properly executed and documented.
        

22.4. Additional information. [Optional]


LEA 23. Shareholder resolutions

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

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

23.6. Describe whether your organisation reviews ESG shareholder resolutions filed by other investors.

Yes, we review the vast majority of shareholder proposals on a case-by-case basis. While Wellington Management does not rely on any external parties for recommendations or vote determinations, we do subscribe to the research products supplied by various proxy advisors and research providers, including ISS and Glass Lewis. 

Wellington's Proxy Voting Guidelines outline our approach to evaluating these resolutions, with shareholder proposals denoted with "SP" next to them. For example, our approach to shareholder proposals requesting the adoption of a clawback policy is as follows: We believe that companies should have the ability to recoup incentive compensation from members of management who received awards based on fraudulent activities or an accounting misstatement. Consequently, we may support shareholder proposals requesting that a company establish a clawback provision if the company’s existing policies do not cover these circumstances. 

23.7. Additional information. [Optional]


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


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