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RBC Global Asset Management

PRI reporting framework 2019

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Outputs and outcomes

LEA 09. Number of companies engaged with, intensity of engagement and effort

Indicate the proportion of companies from your listed equities portfolio with which your organisation engaged with during the reporting year.
We did not complete any engagements in the reporting year.

Number of companies engaged

(avoid double counting, see explanatory notes)

Proportion of companies engaged with, out of total listed equities portfolio

Individual / Internal staff engagements

169
19

Collaborative engagements

38
9

09.2. Indicate the proportion breakdown of engagements conducted within the reporting year by the number of interactions (including interactions made on your behalf)

No. of interactions with a company
% of engagements
One interaction
2 to 3 interactions
More than 3 interactions
Total
100%

09.3. Indicate the percentage of your collaborative engagements for which you were a leading organisation during the reporting year.

Type of engagement

% Leading role

  Collaborative engagements

09.5. Additional information. [Optional]


LEA 10. Engagement methods

10.1. Indicate which of the following your engagement involved.

10.2. Additional information. [Optional]

When appropriate, we will initially engage with an issuer through an engagement letter, outlining the relevant issues and communicating our desire to engage. More often, the preliminary component to the engagement involves communication with investee companies over email outlining the desire to engage, the rationale behind the engagement and any background information required to facilitate a dedicated engagement session on the identified issues.

In some cases, our investment teams conduct site visits as part of company meetings and will discuss numerous topics, including ESG. We capture the contents and outcomes of such meetings through our internal tracking and via select teams’ client reporting.


LEA 11. Examples of ESG engagements

11.1. Provide examples of the engagements that your organisation or your service provider carried out during the reporting year.

ESG Topic
Diversity
Conducted by
Objectives

Obtain a commitment from company to improve board gender diversity

Scope and Process

We engaged with a Canadian financial company on its board gender diversity, after engaging with its parent company in previous years on the same issue. When we had expressed our concerns on the lack of board gender diversity to that parent company, the board followed through with its commitment to enhancing board gender diversity. Consequently, we had confidence in the company's willingness to consider investor feedback.

Board gender diversity abruptly decreased after an independent female director left the board due to her outside commitments as a CEO. We engaged with the Chair of the board who agreed that, in his view, increased diversity on the board can lead to improved performance. He provided an update on their search for a replacement, noting that the board was targeting a female director and that he expected a new female director to be appointed within the year.

Outcomes
ESG Topic
Climate Change|Pollution|Health and Safety|Water risks
Conducted by
Objectives

Engage with management to gain additional information on the company's strategy on ESG risk management at a copper mine project.

Scope and Process

Our Global Equity team, having a history of engagement with the company, spoke with the head of the company's environmental group. Specifically, the team was seeking additional information on how the company would approach safety and environmental responsibility, climate change, energy use and mine cleanup. Although the company was only a minority owner in the project, given the materiality of the risks involved, the team sought clarity on risk management measures to ensure these details could be incorporated into its decision-making process.

After engaging with the company, the team was satisfied with the strong culture of health and safety, plans to reduce carbon emissions and innovative work pertaining to the closure and cleanup of mining projects.

Outcomes
ESG Topic
Executive Remuneration
Conducted by
Objectives

Obtain greater clarity from the investee company on local market practices in order to inform our custom proxy voting guidelines.

Scope and Process

The company reached out to our Asian Equities team to discuss our stance on equity compensation plans and change-in-control agreements. The CGRI team then engaged along with the Asian Equities team as management explained the use of accelerated vesting and option awards in the local market, as well as the repercussions of failed votes on executive remuneration.

We were able to gain additional insights into local markets practices, but ultimately maintained some concern regarding the use of accelerated vesting of awards. The engagement, however was beneficial and the company was open to additional dialogue.

Outcomes
ESG Topic
Company leadership issues
Conducted by
Objectives

Discuss concerns over poor performance, communicate importance of sound succession planning, and obtain further clarity on succession planning.

Scope and Process

Following a period of poor relative and absolute performance at one of our investee companies, our Canadian Equity team engaged with the board's Chair and an independent director. This came after the CEO announced his retirement, resulting in a replacement search. We provided advice to the board on an ideal CEO selection process and compensation schemes to increase shareholder alignment, including recommending higher shareholder ownership requirements and clearer alignment between pay and performance. In light of lagging performance, we also recommended more industry experience on the board to improve board oversight.

After the engagement, the company made several hires at the management level that took many of our team's concerns into consideration.

Outcomes
ESG Topic
Company leadership issues|Other governance
Conducted by
Objectives

Engage with both the incumbent board and the dissident in order to inform our voting decision at a contested meeting and communicate our views to the board on performance, governance issues and the merits of a universal ballot.

Scope and Process

Engagement with both the board and the dissident took place regarding a fairly contentious contested meeting. We encouraged the use of a universal ballot as we believe it enhances shareholder rights, allowing investors to vote for a mix of management and dissident nominees on a single ballot. The parties proceeded with a form of universal proxy (still divided into two separate voting cards), and after engaging with both parties we decided to support a mix of management and dissident nominees based on their merits and potential contributions to the board, company and its strategy moving forward.

Outcomes

11.2. Additional information. [Optional]


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