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Aeon Investment Management (Pty) Ltd

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.

In order to ensure that our voting policy is adhered to, Aeon Investment Management reviews all proxy vote instructions as a team before the voting instructions have been submitted. Reviewal of the voting instructions ensures that the instructions are consistent with the companies voting policy.

Once we have submitted our proxy vote instructions, we request proof from our administrators that our instructions were indeed sent by the custodians.

12.3. Additional information.[Optional]

Aeon Investment Management follows the King IV Code, the Five Principles outlined in the Code of Responsible Investing in SA (“CRISA”) and the Six Principles outlined in the UNPRI when making proxy vote decisions on behalf of our clients. We prioritise collaborative engagements according to our exposure, the shares we hold and the shares we consider holding. Any conflicting resolution is usually voted against if no sufficient justification is provided. 

Aeon Investment Management considers it’s internally developed Social Policy in its proxy voting processes. Inevitably most resolutions do not cover the Social Policy, and in this instance, we interact and lobby company management directly on socio-economic risks and factors prevalent due to their operations.


A detailed copy of Aeon Investment Management's Proxy Vote process can be found using the following link:

https://www.aeonim.co.za/wp-content/uploads/2020/03/Aeon-Investment-Management-Governance-Policy.pdf

 

 


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.

For the 2019 financial period, Aeon Investment Management did not participate in a securities lending program as client mandates do not allow securities 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]

Service providers in this case are defined as stockbrokers and activist investors.


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.

16.3. 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]

Aeon Investment Management communicates its rationale for abstaining or voting against (or for) management recommendations to its clients. However, our proxy vote decisions are available to the public upon request (https://www.aeonim.co.za/engagement-activities/#). 


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%)

100 %

Specify the basis on which this percentage is calculated

17.3. Additional information. [Optional]

Our proxy voting decisions can be found online (https://www.aeonim.co.za/wp-content/uploads/2020/03/Aeon-IM-Annual-Voting-Record-2019.pdf)


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
68 %
Against (opposing) management recommendations
32 %
Abstentions
0 %
100%

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

40

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 whether 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.

167 Total number

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

Went to vote
96.41 %
Were withdrawn due to changes at the company and/or negotiations with the company
0 %
Were withdrawn for other reasons
0 %
Were rejected/not acknowledged by the company
3.59 %
Total 100%

20.4. Of the ESG shareholder resolutions that you filed or co-filed and that were put to a vote (i.e., not withdrawn), indicate the percentage that received approval:

156 >50%
11 50-20%
<20%

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

The ESG shareholder resolutions filed by Aeon Investment Management included resolution concerning remuneration, director election, political donations and auditor independence.

A few of the examples of these resolutions can be seen below:

Naspers Limited

Ordinary Resolution 7 - To endorse the company's remuneration policy: Naspers' Remuneration Policy lacked detail in terms of how the incentives were ultimately determined (benchmarking, performance targets). The approximately R1.5bn total remuneration that the CEO earned, placed him among the richest one percent of people on the planet. This is of concern because in 2015, 2016 and 2017 the high voting A shares were abused to vote in the remuneration policy and report. Aeon Investment Management voted against this resolution. The majority of participating shareholders voted against this resolution at the Naspers AGM 

Woolworths Holdings Ltd.

Non-binding advisory Resolution 2 -  Approval of the Remuneration Report: There was minimal disclosure on actual targets for STIs and LTIs, local and international benchmark constituents and the general link between the strategies and incentive measures. In accordance with policy, Aeon Investment Management voted against this policy. The majority of participating shareholders voted against this resolution at the Naspers AGM and an investor call was organised by Naspers management.

 

 

 

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

Yes, we do. If the holding is in our portfolio and requires a filing of a material ESG issue.

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
Executive Remuneration|Company leadership issues
Conducted by
Objectives

Improve the corporate governance practices and remuneration policies of companies that we are invested in order to meet global best standards, and contribute to growing the socioeconomic environment.

Scope and Process

Barloworld Ltd (AGM)

Aeon Investment Management voted against the following resolutions:

  • Ordinary resolution 11 - Appointment of external auditor. Deloitte & Touche has been the appointed auditor for 100 years. This contravenes our policy.
  • Ordinary resolution 12.1 & 12.2 - The non-binding advisory vote on the remuneration policy and the implementation report. There is no clear link between the business strategy and the incentive scheme. Further clarity on the reasoning is required on the use of Economic Profit as a metric in determining incentive schemes; this measure is ambiguous and further disclosure is required.
  • Special resolution 1.1, 1.3, 1.4, 1.5, 1.6, 1.9 and 1.13 - Approval of non-executive directors’ fees. The proposed board chairman’s fee compared to the non-executive directors’ fees are excessive. The international directors’ fee increase exceeds inflationary levels. This contravenes our policy.
  • Special resolution 2 - Approval of loans or other financial assistance related or inter-related companies and corporations. There was limited disclosure provided for the possible reasoning and credit terms of lending to related and inter-related companies.
Outcomes
ESG Topic
Executive Remuneration|General ESG|Other

specify

          
        
Conducted by
Objectives

Improve the corporate governance practices and remuneration policies of companies that we are invested in order to meet global best standards, and contribute to growing the socioeconomic environment.

Scope and Process

AngloGold Ashanti Ltd (AGM)

Aeon Investment Management voted against the following resolutions:

  • Ordinary resolution 4 – Re-appointment of Ernst & Young Inc. as auditors of the company. Ernst & Young has an audit tenure of ten years with AngloGold Ashanti. This contravenes our policy.
  • Ordinary resolution 6.2 – Implementation report. There has been no disclosure on the criteria used in determining the independence of nonexecutive directors.
  • Special resolution 1 – Remuneration of non-executive directors. The board chairman’s fees are more than two times that of other non-executive directors’ fees; this contravenes our policy.
  • Special resolution 4 – General authority to directors’ issue for cash, those ordinary shares which the directors are authorised to allot and issue in terms of ordinary resolution five. There is insufficient information provided as to the reasoning for providing the financial assistance, the possible credit terms and whether there are any conditions attached thereto.
Outcomes
ESG Topic
Executive Remuneration|Climate Change|Pollution|Sustainability reporting|Other governance
Conducted by
Objectives

Improve the corporate governance practices of companies and the remuneration policies to global best standards that we are invested in and to reduce the inequality gap.

Scope and Process

Standard Bank Group Ltd (AGM)

Aeon Investment Management voted against the following resolutions:

  • Ordinary resolution 3.1 & 3.2 - The re-appointment of KPMG Inc. and PriceWaterhouseCoopers Coopers Inc as auditors. They have been joint external auditors for the Group since 2002 thus raising concerns of independence.
  • Ordinary resolution 6.2 – Endorse the group’s implementation report. It was proposed in the implementation report that there would be no increase for the non-executive directors' fees. Based on the disclosed 2018's fees, the Chairman's fee still remains 23 times higher than a non-executive director's fees. Granted, Standard Bank is a multinational company, however, we view this fee difference as excessive.
  • Ordinary resolution 9 – Approve: Loans or other financial assistance to related or inter-related companies. 

Aeon Investment Management voted in favour of the following:

  • Ordinary resolution 10.1 - To report to shareholders on the company's assessment of greenhouse gas emissions resulting from its financing portfolio.
  • Ordinary resolution 10.2 - To adopt and publicly disclose a policy on lending to coal-fired power projects and coal mining projections.
Outcomes
ESG Topic
Executive Remuneration|Company leadership issues|General ESG
Conducted by
Objectives

Improve the corporate governance practices and remuneration policies of companies that we are invested in order to meet global best standards, and contribute to growing the socioeconomic environment.

Scope and Process

Mpact Ltd.

Aeon Investment Management voted against the following resolutions:

  • Ordinary resolution 4 - Re-election of director NB Langa-Royds. NB Langa- Royds was part of the board that was responsible in the collapse of African Bank. We, therefore, believe she is not suitable for the role as a nonexecutive director.
  • Special resolution 2.1 - Approval of non-executive directors’ fees –Chairman of the board. The board chairman’s fee increase is 5% which is in line with inflation, however, the fees exceed those of the non-executive members’ fees by more than six times. We requested disclosure of the constituents used in the benchmark group used as comparators for determining non-executive directors’ fees.
  • Special resolution 3 – Approval of financial assistance to related or interrelated company. We generally vote in favour of granting financial assistance to subsidiaries that are 100%-owned. In other instances, we would request further sufficient detail as to why the relevant parties would require financial assistance, who would be liable for the financial assistance, what the terms of the financial assistance would be (pay-back terms), any conflict of interest between the lender and the lendee and whether there are any conditions attached hereto. 

 

Outcomes
ESG Topic
Executive Remuneration|Company leadership issues|Other governance
Conducted by
Objectives

Improve the corporate governance practices and remuneration policies of companies that we are invested in order to meet global best standards, and contribute to growing the socioeconomic environment.

Scope and Process

MultiChoice Group Ltd.

Aeon Investment Management voted against the following resolutions:

  • Ordinary resolution 2 – Reappointment of Independent Auditor. PWC has been the official appointed auditor for MultiChoice for more than 10 years; this contravenes our policy.
  • Ordinary resolution 3.1 – Appointment of Stephen Joseph Zbigniew Pacak (Chair) as a member of the audit committee. Given that JZ Pacak was previously an executive in the group, his appointment as a Chair of the audit Committee is not appropriate as he is not independent.
  • Non-binding advisory resolution 1 – Endorsement of the company’s remuneration.
  • Non-binding advisory resolution 2 – Endorsement of the implementation of the company's remuneration policy.
  • Special resolution 1.1 – Approval of the Non-executive directors’ remuneration.
  • Special resolution 3 - General authority to provide financial assistance in
    terms of section 44 of the Act. 
  • Special resolution 4 - General authority to provide financial assistance in
    terms of section 45 of the Act.

 

 

Outcomes
ESG Topic
Executive Remuneration|Company leadership issues|Other governance
Conducted by
Objectives

Improve the corporate governance practices and remuneration policies of companies that we are invested in order to meet global best standards, and contribute to growing the socioeconomic environment.

Scope and Process

PPC Ltd

  • Ordinary resolution 4 - Reappointment of external auditor - Deloitte & Touche. Deloitte & Touche has been the official appointed auditor to PPC for more than 10 years (since 2002). This contravenes our policy.
  • Non-binding advisory resolution 5.1 - Remuneration Policy.

We noted the proposed changes to the STI plan and required disclosure of
the following:
- The measures used to determine the personal performance measures, their
actual target figures and subsequent weightings for the CEO, CFO and
prescribed officers.
- Liquidity measures and targets used in determining the STI.

  • Non-binding advisory resolution 5.2 - Remuneration Implementation Report.

We noted the proposed changes to the LTI plan and required disclosure of
the following:
- We would prefer that a greater weighting be placed on the relative (peer)
return than the absolute return to ensure a fairer performance
measurement
We required further disclosure on the metrics used in determining long-term
incentives. Given the nature of PPC's operations, we also requested the
incorporation of more environmental performance long-term incentives.

We required further information as to the criteria, and processes that were taken to
award the managers.

  • Special resolution 2.1 - Remuneration- board chairman - The fees are excessive (Internal policy).

 

Outcomes
ESG Topic
Executive Remuneration|Company leadership issues|General ESG
Conducted by
Objectives

Improve the corporate governance practices and remuneration policies of companies that we are invested in order to meet global best standards, and contribute to growing the socioeconomic environment.

Scope and Process

Compagnie Financière Richemont SA

Aeon Investment Management voted against the following:

  • Ordinary resolution 4.2 – Election of Joshua Malherbe as a director of the board - We were concerned with his independence status given his affiliation and CFR ( related partiers)
  • Ordinary resolution 4.6 – Election of Jean-Blaise Eckert as a director of the board. He was elected as an audit committee member for the previous financial year. He is a related party to CFR and as a result, is not independent.
  • Ordinary resolution 4.11 – Election of Ruggero Magnoni s a director of the board - lack of independence
  • Ordinary resolution 8.1 - Approval of the maximum aggregate of compensation of the members of the Board of Directors.
  • Ordinary resolution 8.3 - Approval of the maximum aggregate amount of variable compensation of the members of the Senior Executive Committee.
  • Ordinary resolutions 7 – To approve the Directors’ remuneration policy.
  • Ordinary resolution 8 - To approve the 2019 Remuneration Report other than the part containing the Directors' remuneration policy.

 

Outcomes
ESG Topic
Executive Remuneration
Conducted by
Objectives

Improve the corporate governance practices and remuneration policies of companies that we are invested in order to meet global best standards, and contribute to growing the socioeconomic environment.

Scope and Process

Impala Platinum Holdings Ltd.

Aeon Investment Management voted against the following:

  • Ordinary resolution 4 - Endorsement of the Company's Remuneration Policy.

We note disclosure of remuneration policy's relation to the business strategy. We would, however, appreciate further detail as to how the objectives are measured and implemented. We requested disclosure of the actual organisational and personal objectives used in determining the CEO, CFO and prescribed officers' short-term incentive. 
The LTIP targets include TSR (50% weighting) and ROE (50% weighting). We believe the weighting placed on TSR is too high and promotes short-term decision-making from the management’s side that has the potential to destroy shareholder value.

  • Ordinary resolution 5 - Endorsement of the Company's remuneration implementation report.
  • Special resolution 1.1 - Remuneration of the chairperson of the board. The board chairperson's remuneration is more than five times that of nonexecutive directors’ remuneration. This contravenes our policy.
  • Special resolution 1.2 - Remuneration of the Lead Independent Director. The lead independent director's remuneration is more than three times that of non-executive directors’ remuneration. This contravenes our policy.
Outcomes
ESG Topic
Executive Remuneration|Company leadership issues|General ESG|Other governance
Conducted by
Objectives

Improve the corporate governance practices and remuneration policies of companies that we are invested in order to meet global best standards, and contribute to growing the socioeconomic environment.

Scope and Process

Bid Corporation Ltd.

Aeon Investment Management voted against the following resolutions:

  • Ordinary resolution 4.1 – Remuneration Policy
  • Ordinary resolution 4.2 – Implementation of the remuneration policy:
    Commentary as per ordinary resolution 4.1 applies. We requested disclosure of the constituents of the benchmarks used in determining the base pay.
  • Ordinary resolution 8 - Payment of dividend by way of pro-rata reduction of
    stated capital.
  • Ordinary resolution 9 – Creation and issue of convertible debentures.
  • Special resolution 2.1 – Approval of the Chairman’s annual fees – 2019/2020.
  • Special resolution 2.2 - Approval of Lead Independent non-executive
  • directors (SA) annual fees – 2019/2020.
  • Special resolution 2.3 - Approval of Lead Independent non-executive
    directors (International) annual fees – 2019/2020.
  • Special resolution 2.4 - Approval of Non-executive directors (SA) annual fees
    – 2019/2020.
Outcomes
ESG Topic
Executive Remuneration|Company leadership issues
Conducted by
Objectives

Improve the corporate governance practices and remuneration policies of companies that we are invested in order to meet global best standards, and contribute to growing the socioeconomic environment.

Scope and Process

Woolworths Holdings Ltd

Aeon Investment Management voted against the following resolutions:

  • Ordinary resolution 3.1 – Election of Ms Zarina Bassa as an audit committee member
  • Ordinary resolution 4 – Re-appointment of Ernst & Young Inc. as the auditors.
  • Ordinary resolution 6 - Endorsement of the Remuneration Policy
  • Special resolution 2 - Remuneration of non-executive directors
Outcomes

21.2. Additional information. [Optional]

We upload the proxy voting record for the year on our website. The proxy voting records include the outcome of the resolutions at the AGM.

The rationale for the resolutions voted against is available to the public - The summary for the 2019 proxy voting can be found online ( https://www.aeonim.co.za/wp-content/uploads/2020/03/Aeon-IM-Annual-Voting-Record-2019.pdf) 

 


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