If we engage with a company and the engagement is unsuccessful we will either;
a) vote against the company if applicable and inform that will be doing so
b) continue to hold the investment and continue to engage with the company but lower the intrinsic value
c) sell the investment
The approach taken depends on the level of the investment and nature of the engagement. We engaged with Safran when they proposed to buy Zodiac. We felt this was poor deployment of shareholders cash. The purchase eventually went to a shareholders vote and we informed the company we would be voting against them. The company achieved the desired number of votes to proceed with the purchase. Whilst unsuccessful we did manage to ensure the company’s compensation scheme reflected the success or otherwise of transforming the Zodiac business. That is to say that the success of the main aero engine business did not cloud any failure to reach targets set for Zodiac.