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Jupiter Asset Management

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 formulate our policy by considering local market best practice, client feedback, engagement / investment experience, industry / regulatory / public policy developments and fund manager input. The policy is worked on and reviewed by the GS Team and overseen by the CIO's Office.

As engaged investors we are aware that companies require flexibility in how they implement their governance frameworks that offer effective leadership and is appropriate to both the business model and stakeholders. There are various factors behind how we ensure the agreed voting policy is adhered to. Every AGM / EGM ballot is inspected by the GS Team and we have internal workflow controls and checks to ensure this is carried out. This process / control is also subject to external audit. The inspection includes an assessment using our proxy research providers and third party ESG risk research as well as applying consideration to our internal policies. We do not view best practice issues in isolation and should there be an initial concern we will discuss this with the fund manager and where necessary we will engage with the company itself to obtain context and clarity. Should we decide to vote against a proposal following engagement, then we will inform the company of our decisions.

Engagement plays a significant role in ensuring that we adhere to our voting policy, which emphasises the execution of independent analysis and judgement on voting decisions in contrast to indiscriminate adoption of proxy advisor recommendations. Engagement ensures that we not only react to AGM / EGM scenarios, but are also proactive in conducting relationship meetings with chairs and independent directors. It is at these sessions where companies may discuss the Board's thinking around forthcoming developments that may incorporate a best practice consideration (e.g. succession, a new incentive scheme, strategy update). Therefore, our engagements efforts create an opportunity to head off any potential voting issues or signal our intent to engage further and use this opportunity to explain our approach and ensure accordance with our agreed-upon voting policy.

An example where we deviated from our agreed voting policy was the AGM of a large UK-based cruise port operator. We engaged with the company prior to its AGM seeking greater disclosure of the remuneration arrangements of the senior management team. Aside from the Executive Chairman none of the management serve on the Board and the company is therefore not required to disclose their pay arrangements. This absence of disclosure did not meet our expectations for a UK-listed company in terms of transparency on pay outcomes as stated in our policy. In this case, because the company had only recently listed we notified the company of our decision to abstain over the remuneration report, rather than vote against, and we encouraged the company to provide market standards of disclosure in next year's annual report. We remain engaged on the issue pending this year's AGM.

 

 

12.3. Additional information.[Optional]

The participants involved in our voting process are discussed under LEA 12.2. Voting decisions are taken internally as a partnership between the GS Team and the individual portfolio managers and we do not outsource the voting function. Nevertheless, we understand the value and importance of an external perspective as voting issues can incorporate various considerations such as local market context, changes in listing rules and stakeholder issues. Therefore, we also subscribe to two proxy research advisors, ISS and IIAS. However, the ultimate decision and accountability rests with our fund manager, we do not automatically follow third party voting recommendations and each ballot is inspected by the GS Team. In this decision-making process, the criteria we use to review service provider's recommendations include our own knowledge of the company gained through engagement history, analysis of company documents such as annual reports and proxy statements and input from our ESG data providers.

In situations where there is more than one decisionmaker we decide on a case-by-case basis. As noted above the ultimate decision-making power rests with our fund manager, however, we will consult the views of the other decisionmaker in this process.

Where relevant, we are open to discussions with other external parties who may have a position for interest in the vote. This could be the case for shareholder motions or companies at the centre of stakeholder concerns. This could include clients that have a specific policy preference or other stakeholders such as a trade union or shareholder group that could be forwarding a motion. We determine voting for our own funds and where the segregated client has provided us with a mandate. However, as responsible investors, we are open to dialogue and willing to listen to external parties.

We are part of a network called the Corporate Governance Forum (CGF). This a collection of London-based ESG professionals who convene weekly / fortnightly calls to primarily focus on company related engagement and this can refer to an exchange of ideas around voting. Again, the decision rests with our fund managers, this collective does not create joint voting decisions but we think it is beneficial to keep an open approach.


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.

Jupiter does not engage directly in stock lending. However, our clients are free to enter into such agreements in accordance with their own policies, including the decision to recall stock. These decisions are taken independently of Jupiter. On occasion, where our clients engage in stock
lending we may, at our discretion, discuss with them the option of recalling their stock in order to vote on significant investment-related matters.

There are various technical and operational elements behind our reason not to engage in stock lending which are described below. However, the overall position is in principle governed by a belief by our fund management department that stock lending may not be consistent with our approach as long-term investors (i.e. we do not wish to lend stock in order to facilitate short selling).

Stock lending can impact the ability to recall / sell stock out on loan and therefore affect the fund managers portfolio management – the internal view has been that this outweighs the upside of a small stock lending fee.

14.4. Additional information. [Optional]

Experience has shown us that it is beneficial for all parties and our stakeholders to be proactive in our engagement activities i.e. we have a strategy to engage in routine circumstances away from problem scenarios and the AGM cycle. These meetings are conducted with non-executive and independent directors of our holdings and  during them  we take the opportunity to discuss long-term ESG issues. It is also important to note that these meetings also cover our approach to voting and voting preferences. It is firmly a two-way dialogue whereby the company may sound us out on future issues before a company starts a formal consultation process or issues the AGM / EGM agenda.

In terms of our voting practices, we inspect every ballot and depending on the materiality and our understanding of the issue we will engage to seek assurances or obtain further details to make an informed decision. It is during this process where we will inform a company of our voting intention ahead the AGM. Therefore, the vast majority of these cases fall where there has been an engagement triggered by Jupiter or the Company themselves.


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.

Explain

          We may have had proactive engagement ahead of any vote or proposal being issued and general ESG and voting considerations and expectations would have been communicated. Therefore, when the formal proposals are released it is incumbent on us to update the company on our thoughts.
        

15.3. Additional information. [Optional]

Experience has shown us that it is beneficial for all parties and our stakeholders to be proactive in our engagement activities i.e. we have a strategy to engage in routine circumstances away from problem scenarios and the AGM cycle. These meetings are conducted with non-executive and independent directors of our holdings and during them we take the opportunity to discuss long-term ESG issues. It is also important to note that these meetings also cover our approach to voting and voting preferences. It is firmly a two-way dialogue whereby the company may sound us out on future issues before a company starts a formal consultation process or issues the AGM / EGM agenda.

In terms of our voting practices, we inspect every ballot and depending on the materiality and our understanding of the issue we will engage to seek assurances or obtain further details to make an informed decision. It is during this process where we will inform a company of our voting intension ahead the AGM. Therefore, the vast majority of these cases fall where there has been an engagement triggered by Jupiter or the Company themselves.


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.

Explain

          Where we have had proactive engagement outside the voting period and have discussed voting and ESG expectations. These expectations may or may not have been met and we will communicate this.
        

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]

Voting rationales are communicated directly in our client reporting. However, we also disclose public rationales on a selected basis. We produce a Stewardship Report which is a public document and this also captures selected voting activity with associated engagement and rationales. 


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%)

96 %

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]

Jupiter endeavours to vote wherever possible and practicable, taking into consideration local market and third party requirements, such as Powers of Attorney and share blocking. As the practice of share blocking inhibits trading in securities, Jupiter considers this to be potentially restrictive to our investment activities and therefore we are selective when voting in certain overseas jurisdictions where share blocking occurs.


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
96 %
Against (opposing) management recommendations
4 %
Abstentions
0 %
100%

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

16

18.4. Additional information. [Optional]

The GS Team reviews all voting decisions on a case by case basis, including instances where a vote against management may be made. We generally communicate with companies by email or by phone prior to making a voting decision in cases where we find areas of concern.

The decision to vote against may be defined already from a previous engagement or it could be an escalation point where we have not reached a suitable outcome in the current phase of engagement or we have not seen suitable progress.

In other circumstances where we have encountered a new issue i.e. where there is no history or prior assurances, the GS Team would inspect the ballot and liaise with the fund manager. Depending on the issue, this may lead to a vote against, or we may need to engage further with the company. Where relevant this may involve engagement with Investor Relations, Company Secretariat or even Chairman / independent directors.

Where we have engaged with a company over a vote then we will communicate our decision ahead of the meeting deadline.

The portfolio managers are actively involved in our voting activity. We also have a Stewardship Committee where voting and engagement outcomes are discussed. Fund managers attend these meetings and discuss their role in reaching these voting decisions.


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.

Specify

          Communicating with regulators and policy makers.
        

19.3. Additional information. [Optional]

The same approach to post voting escalation applies to the commentary provided within this survey concerning engagement escalation. 


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.

1 Total number

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

Went to vote
100 %
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
0 %
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:

100 >50%
50-20%
<20%

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

BP plc: A collective engagement in which we acted as co-filers of a resolution requesting that BP set out its business strategy consistent with the goals of the Paris Agreement on climate change. The engagement formed part of the 'Climate Action 100+' global investor initiative and was led by members of the Institutional Investors Group on Climate Change (IIGCC). The lead investors in the shareholder coalition developed the resolution after an extended engagement with BP's Board which announced its support for the resolution in advance of the AGM. Jupiter was subsequently invited as an IIGCC member to lend our support to the resolution in order to ensure it's inclusion on the AGM agenda. As engaged, long-term shareholders in BP and as supporters of TCFD, we viewed the proposals as being constructive and in the long-term interests of the company and all of its stakeholders. The resolution, developed through IIGCC's corporate engagement group, called on BP to disclose how its business strategy, including each new material capital investment, is consistent with the goals of the Paris Agreement. It also required BP to disclose further metrics. The resolution was passed at the AGM with near unanimous shareholder support.

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

Yes, Jupiter reviews all types of resolutions it receives on ballots whether they are shareholder ESG items or management proposals. In terms of the ESG shareholder items, they are in the first instance scrutinised by the GS Team. Part of this process involves liaison with the fund manager and we also draw upon the expertise and experience of our sustainable investment strategy. Although the investment personnel from this strategy may not hold the particular stock, their experience in this field could prove valuable in terms of understanding the landscape, themes and wider issues surrounding these proposals.

We review ESG shareholder resolutions on a case by case basis, this may involve engagement with the relevant company or proponent of the resolution.

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

Pre-AGM call with the company's Remuneration Committee Chairman to understand further details around the use of discretion applied to variable pay outcomes following the conclusion of regulatory investigations involving the CEO.

Scope and Process

We consulted the company in advance to the AGM to understand further details about their use of discretion on CEO variable pay outcomes, informing our voting decision on the remuneration report. In this process we considered proxy advisor views that the deduction applied to variable pay was too low given the severity of what had occurred. Our communication with the company yielded additional insights into its use of discretion, which informed our voting decision to support the remuneration report on the basis that total malus and regulatory fines appeared appropriate to the situation. 

Outcomes
ESG Topic
Climate Change|Shareholder rights
Conducted by
Objectives

Collective engagement in which we acted as co-filers of a shareholder resolution requesting the company to set out its business strategy consistent with the goals of the Paris Agreement on climate change. The engagement was part of the 'Climate Action 100+' global investor initiative and was led by members of the Institutional Investors Group on Climate Change (IIGCC), which Jupiter joined in 2019.

Scope and Process

We worked collectively with other IIGCC members to co-file the shareholder resolution, which was developed after the lead investors of the shareholder coalition completed an extended engagement with the company's Board. We lent our support to ensure the resolution appeared on AGM agenda. As engaged, long-term shareholders and as supporters of the recommendations of the Task Force on Climate on Climate-Related Disclosures (TCFD), we viewed the proposals as being constructive and in the long-term interests of the company and all of its stakeholders.

The resolution yielded the outcome of company commitment to change as it called on the company to disclose how its business strategy, including each new material capital investment, is consistent with the goals of the Paris Agreement. It also required the disclosure of related metrics and targets to promote operational greenhouse gas reductions, the estimated carbon intensity of energy products, and the linkage of its targets with executive remuneration. The resolution was passed at the AGM with near unanimous shareholder support.

Outcomes
ESG Topic
Executive Remuneration|Human rights|General ESG|Water risks|Labour practices and supply chain management
Conducted by
Objectives

We demonstrated active ownership by casting proxy votes following due consideration of human rights, labour and environmental issues. Human rights and  human capital related issues specifically relate to shareholder proposals concerning the usage of facial recognition technologies, preventing products promoting hate speech, and how to address sexual harassment. Environmental issues relate to shareholder proposals regarding food waste and sustainability integration into senior executive compensation. 

 

Scope and Process

We considered themes raised in each shareholder proposal, using voting to reflect our views following due consideration of these issues.

In terms of human rights, human capital:

We voted against shareholder proposals that would limit the use of facial recognition technology due to its positive use cases e.g. to help save survivors of humantrafficking.

We voted in favour of  a resolution requesting the company produce a report assessing the adequacy and enforcement of product listing and content policies to avoid promotion of hate speech given this issue's societal impact and the important role such assessment plays in preventing content-related controversies.

We also supported a resolution requesting the company review its policies on sexual harassment as additional information allows us as engaged shareholders to better assess the company's management of this human capital related risk.  

Re Environment/ESG:

We decided to vote in favour of shareholder proposals regarding food waste and the integration of sustainability into executive compensation. In our consideration of the issues involved we agreed that the environmental implications of food waste as a contributor to climate change and avoidable use of water and cropland merited further monitoring. We also agreed on the importance of ESG integration in executive remuneration.

Outcomes
ESG Topic
Human rights
Conducted by
Objectives

We demonstrated active ownership by casting proxy votes following due consideration of human rights related issues. These specifically relate to shareholder proposals requesting the company establish a human rights board committee. 

Scope and Process

We considered the human rights themes raised the shareholder proposal and used our proxy voting to reflect our views following due consideration of related issues. The shareholder proposal requested the company establish a human rights board committee to address human rights risks such as those associated with the company's international scope, including geographies with human rights concerns, and payment processing services which could involve human rights complicity risks. Our process of deciding our voting decision included a review of the company's current human rights related policies including consideration that the oversight of these risks is already a remit of the board's Nominating and Corporate Governance Committee.

The outcome of our considerations was a decision to vote against the proposal, as we believed that establishing a standalone human rights committee may not be the most appropriate means to oversee human rights risks and the company already had relevant policies / committees in place. 

 

Outcomes
ESG Topic
Company leadership issues
Conducted by
Objectives

We engaged in a pre-AGM review of the company's board composition.

Scope and Process

We consider the expertise and experience of board members to be a matter of utmost importance and thus will review board composition prior to relevant AGM voting decisions. In this case, our review of the company's board composition led us to identify an individual whose track record as a director at a previous company could potentially result in concerns, both in terms of company performance and reputational issues. As a result, we decided to vote against the director election.

Outcomes
ESG Topic
Climate Change|General ESG|Political spending / lobbying
Conducted by
Objectives

Pre-AGM meeting with group executives to discuss a set of ESG subjects including climate change, health and safety, tailings dam management and relationships with local communities. During this meeting we specifically requested further details on a shareholder resolution calling on the company to suspend its membership of industry associations which are not aligned to its stated support for the goals of the Paris Agreement.

Scope and Process

During the meeting the Board provided shareholders its perspective on the shareholder resolution presented at the upcoming AGM. In the its view, a vote against was merited due the company's internal governance of industry association memberships and that it would soon be announcing a second internal review of its memberships.

We considered the company's rationale, however, as investors aligned with the expectations of the  Institutional Investors Group on Climate Change (IIGCC) our view is that company's public policy engagements should be aligned with its climate change commitments. In this case, although we supported the Board’s internal governance measures to date, we decided to vote in favour of the resolution as we felt that the company’s efforts to improve perceptions of its management of broader ESG issues was being undermined by a lack of transparency regarding the role of its trade association memberships. We communicated our voting rationale to the company in advance to the AGM. 

Outcomes
ESG Topic
General ESG
Conducted by
Objectives

Pre-AGM engagement with company's Investor Relations to gain an overview of the group's corporate governance, thereby enabling an informed voting decision. 

Scope and Process

In the call we discussed various matters of corporate governance including major shareholders, the recent appointment of a new CFO, executive remuneration, board composition and the board's approach to direct engagement of shareholders, an area which remains an evolving area of Scandinavian corporate governance. By engaging directly with the company we were able to understand insights about their corporate governance practices that we may not have otherwise encountered. The content of the call informed our voting decision at the AGM, where we subsequently supported all items on the agenda. 

Outcomes
ESG Topic
Diversity
Conducted by
Objectives

Pre-AGM engagement with the company to emphasise the importance of gender diversity in light of an all-male Supervisory and Management Board.

Scope and Process

In reviewing items for a company AGM we observed an absence of gender diversity at the board and management level. As we had no previous dialogue with the company, we decided to vote in favour at the AGM but to communicate our views on diversity by sending a letter to the company. In our letter we encouraged company leadership to consider diversity in relation to succession planning for three Supervisory Board members whose terms expire in 2019.

Later on we were pleased to see the company announce that its new Chief Risk Officer, who is female, would be joining the company and its management board, showing  improvement on gender diversity. 

Outcomes
ESG Topic
Health and Safety
Conducted by
Objectives

The pre-AGM engagement began when the company reached out to us for consultation on its new remuneration policy, which would be adopted subject to approval at the forthcoming AGM. 

Scope and Process

In our response to the consultation we noted with positivity that safety, diversity and inclusion formed a separate metric within the annual bonus which would apply as an underpin to the entire bonus award rather than a separate weighted metric. It is our view that any health and safety incidents should be meaningfully integrated into executive remuneration and this is an area of monitoring and engagement that we have applied across various companies in our portfolios. 

Outcomes
ESG Topic
Company leadership issues|Anti-bribery and corruption
Conducted by
Objectives

A pre-AGM call with Investor Relations to understand further details on the nature of historic practices related to bribery and corruption related fines and steps taken by company leadership to improve the management of these risks via enhanced anti-bribery policies and procedures. 

Scope and Process

Following the call we were satisfied that the Board had taken appropriate steps to enhance anti-bribery related policies and procedures since the company first self-reported these issues to the authorities five years prior. As a result of our engagement we determined that support for management was warranted at the forthcoming AGM. 

Outcomes

21.2. Additional information. [Optional]


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