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British Columbia Investment Management Corporation

PRI reporting framework 2019

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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 based on our custom voting policy and staff are trained on how to implement our voting policy. Regular discussions are held to ensure ongoing consistency with the voting policy. Exceptions are sometimes adopted for specific market practices (e.g. lower threshold for independence for Japanese companies) and are part of the training protocol. Exceptions are internally documented to ensure consistency across the voting team.

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.

14.3. Indicate how voting is addressed in your securities lending programme.

14.4. Additional information.

Our default position is to recall all securities for all markets for proxy voting purposes. BCI's securities lending agent occasionally flags lending opportunities that would occur during voting events. The decision to not recall the securities is made by the Vice President, ESG, Public Markets after weighing the benefits of revenue maximization against longer term stewardship responsibilities.


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

          We sometimes communicate with companies when there are proxy contests or M+A activity, when they make a request, or when we are engaging with them.
        

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.

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 often convey our voting record directly to Canadian companies during meetings and in some cases (e.g. say-on-pay) via letters to the Chair of the relevant board committee.

In addition, our public disclosure on proxy voting includes voting rationale for each vote against management and every shareholder proposal.


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%)

97 %

Specify the basis on which this percentage is calculated

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

17.3. Additional information. [Optional]

In 2018, after implementing a custom proxy voting policy, we voted all of our holdings, except in certain situations indicated above in 17.2.


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
72 %
Against (opposing) management recommendations
28 %
Abstentions
0 %
100%

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

10

18.4. Additional information. [Optional]


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]


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.

20.2. Indicate the number of ESG shareholder resolutions you filed or co-filed.

2 Total number

20.3. Indicate what percentage of these ESG shareholder resolutions resulted in the following.

Went to vote
0 %
Were withdrawn due to changes at the company and/or negotiations with the company
100 %
Were withdrawn for other reasons
0 %
Were rejected/not acknowledged by the company
0 %
Total 100%

20.4. Of the ESG shareholder resolutions that you filed or co-filed and that were put to vote (i.e. not withdrawn) how many received:

>50%
50-20%
<20%

20.5. Describe the ESG shareholder resolutions that you filed or co-filed and the outcomes achieved.

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

We analyse shareholder proposals on a case-by-case basis to determine whether the proposal protects shareholders, increases their rights, or increases companies' management of ESG risks in a way that is not overly prescriptive or burdensome. In 2018, we supported 60% of all shareholder proposals. Broken down by ESG category, we supported 48% of environmental proposals, 75% of social-related proposals, and 60% of governance-related proposals.

20.7. Additional information. [Optional]

Along with several Canadian institutional investors, BCI filed three shareholder proposals in 2018 at Canadian companies, calling on them to adopt an advisory vote on executive compensation. One company agreed to provide the advisory vote, so the proposal was withdrawn. The other proposals may go to a vote in spring 2019.

BCI also co-filed a shareholder proposal at an American company, requesting disclosure of greenhouse gas reduction targets consistent with the Paris Climate Agreement. This proposal may go to a vote in spring 2019.


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
Climate Change
Conducted by
Objectives

BCI voted in favour of proposals at Kinder Morgan Inc. and Anadarko Petroleum, calling for the companies to publish an assessment of the impacts to their portfolios of scenarios consistent with limiting global warming to two degrees Celsius or below. In both cases, we believed that the additional disclosure would help in better understanding and assessing the effects of environmental risks on the companies’ activities and longer-term financial results. The proposal at Kinder Morgan received 59.7% support, while the Anadarko Petroleum proposal received 53.5% support.

Scope and Process

We typically support proposals that seek additional reporting when there is increasing regulatory pressure and when the proposed actions are likely to enhance a company's reputation as a market leader and its long-term ability to operate.

Outcomes
ESG Topic
Diversity
Conducted by
Objectives

BCI voted in favour of a proposal calling for Starbucks to publish an annual diversity report to shareholders which details the policies and programs that the company has in place to increase gender and racial diversity in the workplace. As we are a proponent of increased diversity representation at the overall company level, and on the board, we believed such a report would provide greater clarity on the steps that Starbucks is taking to achieve this, as well as identify any related risks to the company. Although the proposal failed to pass, 34.7 per cent of Starbucks shareholders voted in favour. The significant level of support signals that shareholders want to see increased transparency from companies around their efforts to enhance workplace diversity.

 

Scope and Process

We typically support proposals that seek additional company reporting when we believe such disclosure will enhance our ability to assess the related risks.

Outcomes
ESG Topic
Executive Remuneration
Conducted by
Objectives

BCI has a history of compensation concerns at Wynn Resorts Limited, having voted against either the triennial advisory vote on executive compensation, or the election of Compensation Committee members, for a number of years. Despite a change in 2018 to an annual say-on-pay, the previous year’s low level of shareholder support (58.7%) did not yield sufficient improvement, and BCI again voted against the advisory vote on executive compensation, as well as withholding votes on two directors. We felt that the compensation plan, as presented, did not provide a sufficient alignment between pay and performance, it lacked sufficient disclosure, and contained features that we do not consider to be in line with best practice. Furthermore, we were disappointed by the board’s lack of responsiveness to shareholder concerns. There was a rarely seen, very high level of dissent, with 80.0 per cent of shareholders voting against the proposal.

Scope and Process

Our primary focus is on pay for performance – basing an executive’s overall compensation on specific measurable incentives that motivate and reward improved long-term performance while discouraging undue risk taking.

Outcomes

21.2. Additional information. [Optional]


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