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Alberta Investment Management Corporation

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.

AIMCo's Responsible Investment team reviews and approves every ballot item to ensure consistency and exercise shareholder voice. Specific ballot items such as say-on-pay and Shareholder Proposals are flagged for additional analysis and review. The Responsible Investment team considers multiple research inputs and conducts further research for key ballot items. In addition, the Responsible Investment team confers with relevant portfolio managers prior to voting for companies on AIMCo's Strategic Watch List or on particularly unique or contentious issues.

12.3. Additional information.[Optional]


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]

AIMCo's custodian will initiate a recall of loaned Canadian and US securities and restrict all securities with upcoming proxy votes from the lending program. These securities shall subsequently be made available for lending after the record date. Any securities that cannot be successfully recalled will be reported to AIMCo and/or their proxy service provider on a timely basis. AIMCo recalls 100% of all securities for the purposes of voting except for select securities. These are identified as top earners by AIMCo's Collateral Management team, resulting in 10% of the top earners being recalled for voting purposes.


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]

AIMCo writes up to 10-15 issuers per quarter on the topics of diversity, climate-related disclosures, supply chain risks, cybersecurity,  executive compensation and say-on-pay.  AIMCo takes a considered approach to vote in alignment with our bespoke proxy voting guidelines and we conduct our own independent research to further inform our voting decisions by engaging with companies where an adverse vote was made. Outcomes from the quarterly letter campaign are recorded and referenced to inform voting rationales in future meetings.


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]

After AIMCo approves a proxy ballot, Glass Lewis executes the vote on our behalf. Through this process the issuer is notified of AIMCo's voting stance. If AIMCo abstains, votes against management recommendations, or has reservations about a management proposal then AIMCo will include a vote note, explaining the rationale for the voting decision. If AIMCo is contacted about our vote rationale after the vote, we may engage with the company as appropriate and further explain why a vote was cast in a particular manner. In addition, our proxy voting history which includes our rationale is posted on our website. 


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%)

99.7 %

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]

We strive to always exercise shareholder voice and the only instances in which a vote does not occur are due to power of attorney issues for certain markets or issuers, or situations in which we were actively blocked from voting our shares.  


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
86 %
Against (opposing) management recommendations
11 %
Abstentions
3 %
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.

19.2. Indicate the escalation strategies used at your organisation following abstentions and/or votes against management.

Specify

          AIMCo also considers escalation strategies such as advocacy and inclusion of issuers on our exclusion list.
        

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.

3 Total number

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

Went to vote
33 %
Were withdrawn due to changes at the company and/or negotiations with the company
67 %
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:

0 >50%
39 50-20%
0 <20%

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

AIMCo, along with other peers, filed a shareholder resolution at three Canadian issuers to request that the Board of Directors adopt a policy that shareholders be permitted to vote, on an annual and advisory basis, on a management resolution to ratify the compensation of Named Executive Officers set forth in the proxy statement. Following this, AIMCo received commitment letters from two companies to adopt Say-on-Pay at their upcoming Annual General Meeting (AGM), after which we formally withdrew our proposals at these two issuers. The proposal at the third company went to vote at the AGM and the resolution received 39% support. 

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

As part of our internal proxy voting process, AIMCo evaluates all shareholder proposals we can vote on with independent proxy voting research in tandem with other service provider ESG research. We support timely and reasonable proposals that align with our assessment of the company's ESG risks and opportunities and uphold corporate governance principles such as say-on-pay, majority voting and gender diversity. Resolutions requesting companies to report and disclose on management of its relevant ESG risks are generally supported by AIMCo, provided the company lacks disclosure on these risks or is lagging compared to what is considered generally acceptable disclosure such as that provided by peers. We consider whether the shareholder proposal will ultimately enhance value to the company and to shareholders. Proposals that place undue constraints on the issuer and/or proposals that are duplicative of reporting protocols already in place will not be supported by AIMCo. 

20.7. Additional information. [Optional]

AIMCo joined a collaborative engagement with Canadian institutional investor peers requesting select Canadian issuers to adopt say-on-pay. For issuers with no say-on-pay that three or more peers hold in common, a dialogue is requested. This collaborative engagement process has two steps. First, a letter is sent to the issuer requesting a dialogue on say-on-pay. If the issuer refuses to add say-on-pay on the ballot without a sufficient rationale, AIMCo will file a shareholder proposal along with peers. The objective of the engagements is to create a level playing field for issuers and to enhance shareholder voice.

For the 2019 AGM season, AIMCo co-filed a shareholder proposal requesting say-on-pay be added to the ballot at three Canadian issuers. Following two issuer commitments to adopt say-on-pay, AIMCo proceeded to withdraw two of the proposals, while the third one went to vote on the AGM.  


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
Diversity
Conducted by
Objectives

To enourage companies to adopt diversity targets, policies, and board term limits to encourage refreshment and greater diversity. 

Scope and Process

AIMCo's proxy voting guidelines include diversity as an attribute for a well functioning board.  AIMCo may, subject to discretion, vote against or withhold our vote from the chair and/or members of the nominating committee or another relevant board director in developed country markets where the issuer exhibits low levels of board gender diversity such as where there are fewer than 20% female directors, no stated commitments to achieve gender diversity, and/or where the company has not improved its board gender diversity year-over-year.  Our threshold for board gender diversity is expected to increase to 30% by 2022.

These voting guidelines resulted in 17% of meetings in US, Canada, Europe and Australia, being impacted by having withheld or against votes for certain directors. 

Outcomes
ESG Topic
Shareholder rights
Conducted by
Objectives

To enable shareholders to have access to the nomination process given investor focus on board composition. 

Scope and Process

Proxy access for director nomination is considered a key right for shareholders. AIMCo continues to support proposals that request proxy access while maintaining safeguards on the nomination process. 

We continue to support requests for companies to adopt proxy access for the first time as well as supporting proposals that seek to enhance current proxy access bylaws, such as those proposals that take into account proper thresholds for ownership and board seats given a company's size. During 2019, AIMCo supported all of proxy access shareholder proposals.  

Outcomes
ESG Topic
Diversity|Other governance
Conducted by
Objectives

To foster increased disclosure and allow shareholders to measure progress and fully understand the risks associated with pay inequity concerns globally

Scope and Process

AIMCo voted on several shareholder proposals requesting disclosure of a median pay equity report at various global companies. 

We evaluated the company's current disclosure of policies and initiatives for gender equality, and the scope of this disclosure in accordance with the company's geographic scope (regional vs. global). We also evaluated if providing the level of disclosure requested by the proposal would be beneficial to track the impact of the company’s diversity initiatives, since the median pay gap is a statistically unadjusted figure. The gap is troublesome if there is a fair representation of female workers across the company, but not at the higher levels. 

This analysis resulted in AIMCo supporting 11 shareholder proposals requesting disclosure of a median gender pay gap report.

Outcomes
ESG Topic
Climate Change
Conducted by
Objectives

To advocate and enhance transparency of climate change-related reporting.

Scope and Process

Climate change is an ESG focus area for AIMCo since 2015.

For environmental shareholder proposals, AIMCo tends to support reasonable requests for companies to increase its transparency and reporting of climate-related risks. We do not support duplicative or overly prescriptive proposals that do not clearly enhance shareholder value or transparency of a company's risk. While the majority of environmental shareholder proposals request greenhouse gas (GHG) emissions disclosure, in 2019 we also supported other, sector specific climate-related reporting, such as requests for reporting on pesticide use in the supply chain, packaging and plastic pollution, food waste and water pollution. 

AIMCo supported 23% of reviewed environmental shareholder proposals. 

Outcomes

21.2. Additional information. [Optional]


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