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ClearBridge Investments

PRI reporting framework 2019

You are in Direct - Listed Equity Active Ownership » (Proxy) voting and shareholder resolutions

(Proxy) voting and shareholder resolutions

LEA 12. Typical approach to (proxy) voting decisions

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

Approach

Based on

12.2. 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.

All voting is guided by our ClearBridge Proxy Voting Policy, which is overseen by our Proxy Voting Committee (inclusive of PMs, analysts, general counsel, operations, technology, client service). Voting is administered by an external proxy voting service. Proxy voting policy adherence is reported to the Proxy Voting Committee.

We will also review the recommendations by outside proxy research firms, as well as management's outreach and shareholder proposal proponents' outreach, which occurs fairly regularly during proxy season.

12.3. Additional information.[Optional]


LEA 13. Percentage of voting recommendations reviewed (Not Applicable)


LEA 14. Securities lending programme

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

14.2. Describe why your organisation does not lend securities.

It is ClearBridge’s general policy not to maintain actual or physical custody of client assets.  Although it is a client decision, if we were to be asked, ClearBridge would recommend against securities lending as it may impede proxy voting, etc.

14.4. Additional information.


LEA 15. Informing companies of the rationale of abstaining/voting against management

15.1. Indicate the proportion of votes where you or the service providers acting on your behalf have raised concerns with companies ahead of voting.

15.2. Indicate the reasons for raising your concerns with these companies ahead of voting.

Explain

          Votes related to executive compensation
        

15.3. Additional information. [Optional]


LEA 16. Informing companies of the rationale of abstaining/voting against management

16.1. Indicate the proportion of votes participated in within the reporting year in which, you and/or the service provider(s) acting on your behalf, have communicated to companies the rationale for abstaining or voting against management recommendations.

16.2. Indicate the reasons your organisation would communicate to companies, the rationale for abstaining or voting against management recommendations.

Explain

          Votes related to executive compensation
        

16.3. In cases where your organisation does communicate the rationale for the abstention or the vote against management recommendations, indicate whether this rationale is made public.

16.4. Additional information. [Optional]

We meet with many of our portfolio companies after the proxy season to provide feedback on the proxy from the previous year. 


LEA 17. Percentage of (proxy) votes cast

17.1. 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%)

100 %

Specify the basis on which this percentage is calculated

17.3. Additional information. [Optional]


LEA 18. Proportion of ballot items that were for/against/abstentions

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

18.2. 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
93 %
Against (opposing) management recommendations
7 %
Abstentions
0 %
100%

18.3. In cases where your organisation voted against management recommendations, indicate the percentage of companies you have engaged.

90

18.4. Additional information. [Optional]

*** It should be noted that the above percentage breakdown represents votes for both Management and Shareholder proposals combined (for greater than 100k shares). For only Shareholder proposals (vs typical management proposals), ClearBridge voted over 50% of the votes Against management. We think that there is a very different dynamic between the process of voting on general management proposals and shareholder proposals. Had there been another section to indicate our votes Against management on managment proposals as compared to shareholder proposals, we would have so indicated the difference, which we think is interesting to note. 

In ordinary business cases, we often vote with (For) management (e.g., ratify appointment of auditors, etc.), but we examine each management proposal carefully in accordance with our ClearBridge proxy voting policy, such as executive compensation levels and election of directors, to seek to vote in the best interest of shareholders. 


LEA 19. Proportion of ballot items that were for/against/abstentions

19.1. Indicate whether your organisation has a formal escalation strategy following unsuccessful voting.

19.2. Indicate the escalation strategies used at your organisation following abstentions and/or votes against management.

19.3. Additional information. [Optional]

Each portfolio strategy team may assess the appropriateness of an escalation based on the issue of the proposal at hand, the size of the position, contact with management in the past, industry peer comparison, etc.


LEA 20. Shareholder resolutions

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

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

Yes, we regularly review ESG shareholder resolutions filed by other investors and will cast our vote FOR if the ESG proposal has merit and does not deteriorate shareholder value. We vote all proposals as fiduciaries.

We will also collaboratively dialogue with other investors and meet with the managements of companies.

We are a top 20 shareowner in most of our companies owned and so our vote FOR an ESG proposal (with merit and as a fiduciary) can have a significant impact 

20.7. Additional information. [Optional]


LEA 21. Examples of (proxy) voting activities

21.1. Provide examples of the (proxy) voting activities that your organisation and/or service provider carried out during the reporting year.

ESG Topic
Executive Remuneration|Company leadership issues
Conducted by
Objectives

We voted against executive compensation for a CEO at a company because of the unusually high level of renumeration awarded to management by the board.

While we recognized that the NEOs had added shareholder value in the performance of the stock, we did not believe the amount of the award was warranted given that the CEO was not able to execute on the goals communicated to investors. 

Scope and Process

We reached out to the CFO, the corporate secretary and to the board. We hosted a conference call with the teams who owned the stock. We were a top 5 owner.

In terms of the outcomes, we have contacted more companies about the executive compensation issue, and some cases, companies have even returned most of their pay post our discussion with the management team.

Outcomes
ESG Topic
Climate Change
Conducted by
Objectives

To encourage management to set company-wide goals for GHG reductions

Scope and Process

We reached out to the shareholder proposal filers and discussed our engagement with the company. We reached out to management to discuss our views in support of the proposal. We dicussed with our collaborative climate change related investor networks.

 

Outcomes
ESG Topic
Diversity
Conducted by
Objectives

To advocate for higher inclusion of qualified diverse slate of candidates for the board. The company had no women on the board and then added one woman after we voted (as 100% of shares as #1 shareholder) For the gender diversity proposal for the board directors. Last year we voted again for this proposal.

Scope and Process

We reached out to management to raise this diversity of the board issue again, while continuing the support for their industry leading workplace policies for female employees.

Outcomes
ESG Topic
Sustainability reporting
Conducted by
Objectives

To issue a sustainability report given the low levels of disclosure by the company

Scope and Process

We reached out to the CFO and IR at the company and we discussed our request to increase sustainabiltiy disclosure (as a top 5 owner). The company was very responsive and agreed to publish a report given that they already tracked much of the data we discussed. We explained that this was helpful for pubic disclosure so that investors can understand the company's sustainabiltiy initiatives and reaffirms the importance of their initiatives. 

Outcomes
ESG Topic
Plastics
Conducted by
Objectives

To report on impact of non-recyclable packaging

Scope and Process

We reached out to the company directly, as well as to the proponents of the proposal and had a dialogue about the company's packaging intiatives and where they can continue to add value by not just reducing packaging, but to consider the impact of non-recyclable packaging and how they can start reducing the use.

Outcomes

21.2. Additional information. [Optional]


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