This report shows public data only. Is this your organisation? If so, login here to view your full report.

Sycomore Asset Management

PRI reporting framework 2020

Export Public Responses
Pdf-img

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.

- As a first step, we collaborate very closely with ISS during the preparation of the AGM's season to make sure that our policy is applied at best and that as many cases as possible are covered.

- We also identify voting items or specific situations that require more attention and that we want to handle on a case-by-case basis. For those voting items, ISS issues no voting recommendation for us and "refers" the item to us so that the vote cannot be casted until we have entered the voting instruction ourself. 

- Then, during the voting season, we carrefully review ISS recommendations to detect any potential deviation from our policy or specific situations that might require an exception.

- When a specific situation requires an exception, we enter the rationale directly on the voting plateform under the concerned item so that any exception is documented and easily accessible by any member of the team. 

- At the end of the year, we review all exceptions and report on the proportion of voting decisions they represented in our annual voting report. In 2019, those particular cases represented 0.6% of voting decisions. A majority of them concerned authorizations for operations on share capital which did not fully comply with Sycomore guidelines (reserved to a category of investors such as private placement or silent on the possible use during takeover period) and which were supported by Sycomore because their strategic relevance and/or the control structure of the company justified such an exception. Current company's practices or commitments taken upon engagement can also be a ground for exceptions. 

12.3. Additional information.[Optional]

Sycomore AM has its own voting policy, which it updates every year prior to the start of the voting season, according to which ISS makes custom voting recommendations. Sycomore AM's governance team (5 ESG specialists involved) reviews ISS research and custom voting recommendations. Sycomore AM remains in control of all voting decisions. 


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.

Sycomore AM believes that as a responsible investor there are several practices that should be put in place to lend securities, such as making sure that we vote at AGMs and ensuring that the counterparty will use them in a responsible way. We have decided not to lend securities as we do not have the processes in place to ensure these responsible practices are upheld.

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]

For significant shareholdings (in terms of Sycomore's share of capital and/or companie's weight in Sycomore's portfolios) which are responsive to engagement, we systematically inform the company of the rationales of our votes against management, most often by email or phone. We participate in pre-AGM consultations and encourage companies to organize them as early as possible in the preparation of the AGM, so that shareholder concerns can be anticipated ahead of the AGM and addressed on time. In 2019, we initiated a dialogue with 63 companies in pre-AGM context based on this process.
In addition, we will always give and explain our voting intentions ahead of the AGM if a company asks for them.
Our proxy advisor ISS gives companies included in main indices the possibility to review the draft report on their voting recommendations for fact-checking. This report includes all voting rationales and can give companies indications on main concerns its shareholders might have upon voting.
However, as ISS does not engage on behalf ot its clients, we do not include this type of contacts here.


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 usually communicate and explain rationales before voting so that the company can react - this is why answers for LEA15 and LEA16 are similar.
For significant shareholdings (in terms of Sycomore's share of capital and/or companie's weight in Sycomore's portfolios), we systematically inform the company of the rationales of our votes against management, most often by email or telephone. We participate in pre-AGM consultations and encourage companies to organize them as early as possible in the preparation of the AGM, so that shareholder concerns can be anticipated ahead of the AGM and addressed on time. In 2019, we initiated a dialogue with 63 companies in pre-AGM context based on this process.
In addition, we will always give and explain our voting intentions ahead of the AGM if a company asks for them.
Our proxy advisor ISS gives companies included in main indices the possibility to review the draft report on their voting recommendations for fact-checking. This report includes all voting rationales and can give companies indications on main concerns its shareholders might have upon voting. However, as ISS does not engage on behalf ot its clients, we do not include this type of contacts here.


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]

Sycomore AM exercises all voting rights attached to the securities held in the portfolios it manages and for which it is reponsible for proxy voting, except when voting requires to block shares. 
In 2019, we voted at 436 AGMs. We did not vote at 6 AGMs which required to block shares and at 3 AGMs due to exceptionnal technical or administrative issues in the chain of intermediaries through which votes are communicated. Those 9 AGMs represented 0.1% of the total volume of listed equity holdings for which we could have voted.


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
77 %
Against (opposing) management recommendations
23 %
Abstentions
0 %
100%

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

19

18.4. Additional information. [Optional]

We track the reason why we abstain or we vote against management recommendations for all votes cast within the online proxy voting tool.
For significant shareholdings, we systematically inform the company of the rationales of our votes against management, most often by email or telephone.
Finally, we will always give and explain our voting intentions ahead of the AGM if a company asks for them. (see LEA 15 for details).
 


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]

Our voting policy aims at promoting our vision of a stakeholder-centric governance approach and hence is based on the same principles as our engagement policy. However, when we identify urgent need to engage with a company on a particular issue, this is generally handled separately from proxy voting. For this reason, escalation strategies are applicable to our engagement actions more than to our voting actions.


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.

2 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:

>50%
50-20%
100 <20%

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

In the context of the governance crisis experienced by EssilorLuxottica following the combination of the two groups, which resulted in March 2019 in the filing of an arbitration request with the International Chamber of Commerce by Delfin (holding of Luxottica’s founder Del Vecchio), Sycomore AM co-filed with 6 other international investors two shareholder proposals at the shareholders meeting held on 16 May 2019.  The objective was to elect 2 new independent board members, Wendy Lane and Jesper Brandgaard, in order for them to represent minority shareholders and contribute to the resolution of the crisis between the two parties.

Outcomes: both resolutions received high support rates, respectively 43.7% and 35% of votes in favour, demonstrating very high support from minority shareholders (considering that Delfin, which held 31% of voting rights and Valoptec (Essilor's shareholder employees and retirees holding), which held 4.3% of voting rights did not support the resolution). Those proposals and the significant echo they had contributed to both parties announcing a settlement agreement a few days before the AGM on 13 May, including changes in the governance to overcome the crisis as well as the termination of all claims and legal proceedings.

 

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

We support all shareholder resolutions that encourage companies to improve their ESG practices, insofar as they comply with our engagement principles.

These resolutions are analysed on a case-by-case basis by the ESG team, to ensure that they are relevant, sufficiently well-argued and detailed to have a real impact. 

In 2019, we supported 74% of shareholder resolutions relative to social and environmental issues. In particular, we voted in favour of all resolutions requesting more transparency on ESG considerations (gender pay gap, social impact of specific technologies, impact of operations on local communities...) or calling for greenhouse gas emission reduction targets.

However, we voted against resolutions that did not appear relevant considering the firm’s current practices or its exposure to the risk considered.

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
Diversity
Conducted by
Objectives

GENDER DIVERSITY AT BOARD LEVEL

Encourage companies to increase board gender diversity in order to achieve a minimum 40% threshold for the under-represented gender (in line with the most ambitious existing regulations on this topic in Europe) and engage dialogue on this issue.

Scope and Process

We apply this principle since 2016 for the whole voting scope: for companies that fail to comply with the 40% threshold, we generally vote against the appointment of new male directors or against the renewal of the members and in particular the Chairman of the Nomination Committee, depending on voting options available at the AGM. 

As a result of this policy, gender diversity was at least one of the grounds for voting against the election or reelection of 130 directors in 2019 (around 10% of candidates submitted to election). 

Outcomes
ESG Topic
Executive Remuneration
Conducted by
Objectives

EXECUTIVE REMUNERATION ALIGNMENT WITH GLOBAL PERFORMANCE

Ensure executive remuneration scheme is transparent and aligned with stakeholder's interests over the long term.

Scope and Process

This principle is applied to the whole voting scope. 

In order to encourage transparent remuneration practices that successfully align executive interests with those of other stakeholders over the long term, we request transparency on : 
- The amounts allocated and paid;
- The nature of the quantitative and qualitative criteria used;
- Their respective weightings;
- The calculation methodology used;
- The ex-post target achievement rate.

Furthermore, we recommend:
- The integration of clearly identified, quantifiable and relevant extra-financial criteria that are monitored over time;
- Demanding performance criteria that are consistent with the targets disclosed to the market, where relevant.
- Precise qualitative targets whose achievements levels are factually justified by the Board.

Based on these principles, we voted against 44% of resolutions on executive remunerations in 2019.

Outcomes
ESG Topic
Executive Remuneration
Conducted by
Objectives

SOCIAL ACCEPTABILITY OF PAY

Recognizing that increased shareholder engagement on remuneration schemes' transparency and alignement has not prevented an overall quantum increase over the past years, resulting in a still widening gap with employees' remunerations, we decided to go one step further by formalizing an absolute moderation threshold in our voting policy, representing a symbolic "socially acceptable cap". 

Scope and Process

This principle is applied to the whole voting scope.

In the absence of information for most European companies on employees’ median annual compensation / CEO pay ratio, we use the amount of 250x the average minimum legal wages in France, Germany and the Netherlands (which constitute the majority of our European holdings), i.e. around 4.6 million euros, as a relevant point of reference. As 250 is the average number of working days in the European Union, it offers a symbolic threshold beyond which an executive is paid more in one day than a minimum wage worker is in one year. 

In the United States (3% of our voting scope), where companies now have the obligation to discose the CEO pay ratio, we use the American median CEO pay ratio (140:1, source : Equilar CEO pay ratio survey 2018) as a reference.

Process: Vote against say-on-pay resolution for packages exceeding this threshold.

Based on this principle, we voted against 37 remunerations exceeding this threshold in 2019.

 

Outcomes
ESG Topic
Other governance
Conducted by
Objectives

EMPLOYEE SHAREHOLDING

Support the development of employee shareholding, a key factor of employee's motivation

Scope and Process

This principle is applied to the whole voting scope. 

In order to encourage employee shareholding, we have set no limits to their ownership of capital and support all capital increases reserved for employees, providing they respect our dilution limits (applicable to all capital increases). 

Outcomes

21.2. Additional information. [Optional]


Top