PM CAPITAL encourages good ESG practices and we engage the management of the companies that we own around the improvement of ESG practices.
Failing a suitable outcome, we are may 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.