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Federated Hermes, Inc. (formerly Federated Investors, Inc.)

PRI reporting framework 2020

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 that your agreed-upon voting policy is adhered to, giving details of your approach when exceptions to the policy are made.

Federated Hermes checks a random sample of all automated votes on a quarterly basis to make sure the voting software applies our votes as intended.  Manual votes are reported quarterly to the Proxy Voting Committee for their review.  Finally, Federated's Internal Audit Department includes the proxy voting function in their "continuous audit" program where they check votes throughout the year.

12.3. Additional information.[Optional]

Federated Hermes has hired two proxy service providers.  We use one of the service providers for administrative services (electronic voting platform, bookkeeping, reporting) and research; the other service provider is used for research reports only.


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


LEA 14. Securities lending programme

14.1. Does your organisation have a securities lending programme?

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

14.4. Additional information. [Optional]


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

15.1. Indicate the proportion of votes participated in within the reporting year in which where you or the service providers acting on your behalf raised concerns with companies ahead of voting.

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

15.3. Additional information. [Optional]


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

16.1. Indicate the proportion of votes where you, and/or the service provider(s) acting on your behalf, communicated the rationale to companies for abstaining or voting against management recommendations. Indicate this as a percentage out of all eligible votes.

16.2. Indicate the reasons why 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 abstaining or voting against management recommendations, indicate whether this rationale is made public.

16.4. Additional information. [Optional]


LEA 17. Percentage of (proxy) votes cast

17.1. For listed equities in which you 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%)

99 %

Specify the basis on which this percentage is calculated

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

Besides not voting in share blocking markets, Federated Hermes will not vote if shares are out on loan, and we have determined that the shareholder would benefit more from the lending income than from voting routine matters at the shareholders' meeting.  Federated Hermes will recall shares from borrowers if the matters to be voted upon at the meeting are considered to be material.

17.3. Additional information. [Optional]


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

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

18.2. Of the voting instructions that you and/or third parties on your behalf have issued, indicate the proportion of ballot items that were:

Voting instructions
Breakdown as percentage of votes cast
For (supporting) management recommendations
85 %
Against (opposing) management recommendations
11 %
Abstentions
4 %
100%

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

1

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.

19.3. Additional information. [Optional]


LEA 20. Shareholder resolutions

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

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
Health and Safety
Conducted by
Objectives

We wanted to urge a leading global retail and wholesale pharmacy to be more transparent with respect to their risk management practices surrounding the sale and distribution of opioids.

Scope and Process

We did not engage directly with the company.  Instead we voted FOR a shareholder proposal calling for enhanced reporting surrounding the risks inherent in the opioid distribution business.  We believed at the time that their disclosures were too brief and general to be useful to investors.

Outcomes
ESG Topic
Diversity
Conducted by
Objectives

We wanted to urge companies to improve their reporting on gender diversity.

Scope and Process

We supported shareholder proposals at three global financial institutions that would improve reporting on the topic of gender diversity by including in the existing reporting a measurement of the gender pay gap by looking at median pay.

Outcomes
ESG Topic
Shareholder rights
Conducted by
Objectives

We wanted to urge companies to abandon dual class stock structures 

Scope and Process

On 6 separate occasions in 2019, we voted FOR shareholder proposals calling for the recapitalization of dual class stock structures in order to achieve a "one share, one vote" standard.  In each instance, we determined that the company no longer benefited from the dual class structure.

Outcomes
ESG Topic
Company leadership issues
Conducted by
Objectives

We wanted to urge companies to separate the roles of CEO and Chair.

Scope and Process

On 60 separate occasions in 2019, we supported shareholder proposals to separate the roles of board chairperson and CEO.  We voted in this manner when we determined that the company would benefit from this structure.

Outcomes
ESG Topic
Company leadership issues
Conducted by
Objectives

We wanted to urge companies to adopt majority voting for election of directors

Scope and Process

On 14 separate occasions in 2019, we supported shareholder proposals calling for a change from a plurality voting standard to a majority voting standard for the election of directors.  We believe this voting standard holds directors more accountable for their performance.

Outcomes
ESG Topic
Company leadership issues
Conducted by
Objectives

We wanted to urge companies to adopt annual election of directors.

Scope and Process

On 5 separate occasions in 2019, we supported shareholder proposals calling for a declassification of the board of directors.  We believe annual elections hold directors more accountable for their performance.

Outcomes
ESG Topic
Climate Change
Conducted by
Objectives

We wanted to urge Amazon.com Inc., to improve their climate change reporting.

Scope and Process

Amazon has numerous programs dedicated to reducing its environmental impact, including initiatives related to packaging materials and renewable energy.  However, the public disclosure for these programs is not particularly specific to climate change issues.  Thus, we supported a shareholder proposal, put forth by the Amazon Employees for Climate Justice, to add specific disclosures about how the company would deal with climate-related disruptions. 

Outcomes

21.2. Additional information. [Optional]


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