The overriding principle governing our approach to voting is to act in line with our fiduciary responsibilities in what we deem to be the interests of our clients. We normally hope to support company management; however, we will withhold support or oppose management if we believe that it is in the best interests of our clients to do so.
We vote on a variety of resolutions issues; however the majority of resolutions target specific corporate governance issues which are required under local stock exchange listing requirements, including but not limited to: approval of directors, accepting reports and accounts, approval of incentive plans, capital allocation, reorganisations and mergers. We do vote on both shareholder and management resolutions.
It is our aim to vote on all securities. However, we refrain from voting in securities or markets where the costs and risks associated with voting outweigh the benefits. For example, requirements to reregister securities, problems with powers of attorney and the requirement to be present at the meetings, means that voting will not be undertaken unless a significant threat to shareholder value arises.
Our Corporate Governance specialists assess resolutions, applying our voting policy and guidelines (as outlined in our Environmental, Social and Governance Policy) to each agenda item. These specialists draw on external research, such as the Investment Association's Institutional Voting Information Services, the Institutional Shareholder Services (ISS), and public reporting.
Our own research is also integral to our process and this will be conducted by both our investment and ESG analysts. Corporate Governance specialists will consult with the relevant analysts and portfolio managers to seek their view and better understand the corporate context. The final decision will reflect what investors and Corporate Governance specialists believe to be in the best long term interest of their client.
When voting, where there is insufficient information with which to make a voting decision we may not vote.
Schroders' Corporate Governance specialists are responsible for monitoring and identifying situations that could give rise to a conflict of interest when voting in company meetings. Where Schroders itself has a conflict of interest with the fund, the client, or the company being voted on, we will follow the voting recommendations of a third party (which will be the supplier of our proxy voting processing and research service).
In the situation where a fund holds investments on more than one side of the transaction being voted on, Schroders will always act in the interests of the specific fund. There may also be instances where different funds, managed by the same or different fund managers, hold stocks on either side of a transaction. In these cases the fund managers will vote in the best interest of their specific funds.
Where Schroders has a conflict of interest that is identified, it is recorded in writing, whether or not it results in an override by the Global Head of Equities.
In order to maintain the necessary flexibility to meet client needs, local offices of Schroders may determine a voting policy regarding the securities for which they are responsible, subject to agreement with clients as appropriate, and/or addressing local market issues. Both Japan and Australia have these.
All voting is overseen by investment professionals (including portfolio managers) and is undertaken to enhance returns for clients. Groups of senior investors and compliance staff meet on a regular basis to review historic voting and ensure that it reflects our policy in different geographies.
It is our policy to disclose our voting activity publicly. On a monthly basis, we produce our global voting report which details shareholder proposals for companies during the period and how the votes were cast, including votes against management and abstentions, along with the rationale behind these decisions. The reports are publicly available on our website: http://www.schroders.com/en/about-us/corporate-responsibility/sustainability/influence/.
We also disclose portfolio specific voting activities to clients on request which can be generated on a monthly, quarterly, bi-annual or annual basis.
Our voting logistics are overseen by ISS: they receive the meeting information and deadline dates for all custodians and set their deadline date as the closest deadline for all custodians. Therefore, although some custodian deadlines may be later, all ISS clients adhere to this system. ISS build contingency into these dates as well. From our own internal point of view we run an unvoted report everyday that outlines what votes need to be submitted today in case something has been added without us being notified. This is however, fairly rare.