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Ninety One

PRI reporting framework 2020

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(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.

We use our proxy voting policy, together with independent external governance research, to support and guide the investment professionals on governance considerations. The investment professional makes use of these resources to make an informed decision, in the best interest of our clients, which may differ with the guidance of our policy. For example, during the year we voted against a nominee for an audit committee (our policy recommended a vote for), as there are ongoing corporate governance and risk management failures at the company.

As part of our standard monitoring work, we spot check the application of our custom policy by our external service provider, by asking for explanation on how the policy has been applied.

Our proxy voting process is overseen by our Investment Governance Committee (IGC). The IGC also review and update the proxy voting guidelines and are the final arbiter of any disputes or differences in opinion with respect to votes. The IGC comprised of members including Ninety One’s Co-Chief Executive Officers, Chief Investment Officers, senior members of the investment teams and key members of the ESG team.

12.3. Additional information.[Optional]

We vote at shareholder meetings throughout the world as a matter of policy and principle. We believe that once we become investors, i.e. owners of a company, we assume a stewardship duty and have the responsibility to support or sanction.

Our ‘Ownership Principles and Proxy Voting guidelines’ establish our voting and engagement approach which will apply across all of our equity holdings. It is a comprehensive policy and not only informs how we vote with respect to all resolutions, but also informs both clients and investee companies on the position that we are likely to take with respect to the issues that are placed before us for approval.

We understand that some clients may have their own policies, which may differ from our policy. For clients invested in segregated portfolios we are able to put mechanisms in place to ensure adherence to client specific voting guidelines.

We consider the governance of a company, and by extension, its practical proxy voting application, through the lenses of four pillars. We have identified them as key for the successful running of companies, because they ensure the preservation and growth of the assets entrusted to us by our clients over the long term. They are:

(1) leadership and strategic governance (directors and the board);

(2) alignment with the long-term (remuneration and sustainability);

(3) protecting clients’ capital (share capital management);

(4) disclosure and transparency.

We use an external proxy research and vote execution service provided by Institutional Shareholder Services (ISS). ISS provide us with a service through which they deliver both their benchmark research and Ninety One’s custom policy research. The research is then discussed between the ESG team and the investment team ahead of the deadline, where the ESG team seeks to flag any issues and provide further insight. Where our policy and internal consideration determines that a dissenting vote is to be cast on a resolution or where we feel that we do not have sufficient information to cast an informed vote, we will often engage and raise our concerns with the company ahead of the voting deadline. This allows sufficient time to highlight and discuss concerns and to make amendments, when appropriate, to the voting decision. Once a unanimous decision is made, we submit our vote directly onto the ISS online voting platform. ISS receives the instructions from Ninety One and processes these with the different local sub custodians.

All voting decisions are logged via our research management system, Tamale. We record all communication, any engagement activity and the voting decision (including rationales for dissenting votes). All investment specialists have access to this information.

The proxy voting process is overseen by the Investment Governance Committee (IGC).


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


LEA 14. Securities lending programme

14.1. Does your organisation have a securities lending programme?

14.2. Describe why your organisation does not lend securities.

Ninety One no longer takes part in securities lending as the revenue we had received from such lending had fallen and was felt to be immaterial. Meanwhile the operational and regulatory considerations had increased and also some clients expressed a reluctance for the funds to engage in such lending.

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]

Where our policy and internal consideration determines that a negative vote is to be cast on a resolution or where we feel that we do not have sufficient information to cast an informed vote, we will often engage and raise our concerns with the company ahead of the AGM/EGM. This may be in the form of specific pre-vote engagements, general governance engagements throughout the year or in regular management team catch-ups. This allows sufficient time to highlight and discuss concerns and to make amendments, when appropriate, to the voting decision.


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]

We publish all votes on our website after the associated meeting has taken place. Where our policy and internal consideration determines that a negative vote is cast, we will, if it is deemed appropriate and beneficial, communicate why we have opposed a particular resolution. This may be in the form of specific pre-vote engagements, general governance engagements throughout the year or in regular management team catch-ups.

We record all voting decisions and rationales on our research management system, Tamale. Currently, we communicate voting rationales to clients on request within quarterly reporting.


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%)

97.1 %

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]

Please note that we aim to cast a decision across 100% of our holdings, whether this was to vote or select not to vote.


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
94 %
Against (opposing) management recommendations
5 %
Abstentions
1 %
100%

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

75

18.4. Additional information. [Optional]

Ninety One regards the shareholder vote as a fundamental part of preserving and growing the real purchasing power of our clients’ assets. The manner in which we vote is integral to our stewardship policy. We have divided our proxy voting policy into four sections.

i. Leadership and strategic governance

ii. Alignment for the long-term

iii. Protecting our clients’ capital

iv. Disclosure and transparency

Engagement to reinforce our voting usually targets one or more of the voting categories above.

Where our policy and internal consideration determines that a negative vote is to be cast on a resolution or where we feel that we do not have sufficient information to cast an informed vote, we will often engage and raise our concerns with the company ahead of the AGM/EGM. This allows sufficient time to highlight and discuss concerns and to make amendments, when appropriate, to the voting decision.

All voting decisions are logged via our research management system, Tamale. Here we save down all communication with the investment teams to come to a voting decision, any engagement activity and the voting decision (including rationales for dissenting votes). All investment specialists have access to this information.


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]

In general, whether we engage with the board or engage in collaboration with other shareholders, we will seek to resolve an issue rather than escalating it to a level which may be damaging to the company and our holding held on behalf of clients. 


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
Company leadership issues
Conducted by
Objectives

Improve overall independence levels on boards, respecting local best practice with the objective of stronger oversight and supervision 

Scope and Process

We focused in different companies across different markets to highlight regional differences

Outcomes
ESG Topic
Diversity
Conducted by
Objectives

Improve diversity awareness and considerations across organisations

Scope and Process

When we have carried out board composition conversation, we highlight to companies the need for the diversity mindset to come from the top and cascade down the organisation, all the way to graduate programmes and campus outreach. 

Outcomes
ESG Topic
Executive Remuneration
Conducted by
Objectives

Improve the link between pay and performance

Scope and Process

We identified companies where there was not a strong link between pay and performance. We then engaged with them to understand why such structures were in place, future plans and any mitigating circumstances.

Outcomes
ESG Topic
Climate Change
Conducted by
Objectives

Increase transparency and disclosure around climate reporting

Scope and Process

We supported a shareholder proposal requesting a company to publicly disclose its policies on coal financing.

The vote kickstarted a bigger discussion on the role of financial institutions on coal financing and we will engage with relevant institutions on this matter.  

Outcomes

21.2. Additional information. [Optional]


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