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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.

First State Super has a significant exposure to listed share investments. Exercising the voting rights attached to shares held in public companies is something we regard as being integral to active ownership. Share voting is an important tool for engaging with companies. Voting is an effective way for the Trustee and other investors to publicly express its views on what a company is doing right, and what a company needs to improve.

The Trustee is ultimately responsible for voting decisions and has the right to override the recommendations put forward by its corporate governance advisors and its investment managers.

Voting on Australian Shares
The Funds have appointed a proxy voting specialist, Australian Council of Superannuation Investors (ACSI), to provide voting advice in relation to resolutions of a corporate governance nature for companies in the ASX300 Index. External and internal investment managers are expected to actively consider their position on company resolutions put to Annual General Meetings. 

Where voting is not contentious (defined as cases where both ACSI and the investment manager(s) support a company resolution), the Funds vote in favour of the resolution.  Where voting is contentious (defined as cases where either ACSI or the investment manager(s) do not support a company sponsored resolution), the Head of Responsible Investment will consider each resolution on a case-by-case basis. Inputs to the decision-making process will include ACSI’s proxy voting advice, the views of the investment manager(s) and, if relevant/required, and time permitting, a third-party report.

Voting on Global Shares
For international holdings, voting is achieved through a proxy voting specialist, CGI Glass Lewis, and with investment managers. CGI Glass Lewis provides proxy voting research and vote recommendations for the Vanguard international equities portfolios. Other international shareholdings are voted by the investment managers in line with their proxy voting agency or their own internal voting guidelines. We retain the right to instruct voting decision on the shares we own. The Funds expect the international equities investment managers who hold voting responsibility to: 
- exercise their voting responsibility actively; and 
- report to the Funds on voting activity, highlighting where a vote is made in a manner that is inconsistent with their internal voting guidelines.

Any votes not made in line with our proxy advisors or a manager's policy together with the rationale are reported to our Investment Committee.

12.3. Additional information.[Optional]

We actively contribute to setting the ACSI Governance Guidelines which are used by ACSI’s management to inform their voting recommendations and by us in exercising our voting rights. The Guidelines are co-written and approved by members via working groups and ACSI’s Member Council. 

Link to ACSI’s Governance Guidelines: https://acsi.org.au/wp-content/uploads/2020/01/ACSI-Governance-Guidelines-2019.pdf

We subscribe to ACSI’s International Voting Policy, which is implemented by Glass Lewis. We contribute to the regular review and updates to this Policy together with ACSI and Glass Lewis representatives.


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


LEA 14. Securities lending programme (Private)


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]

Prior to ACSI issuing voting recommendations to members, ACSI attempts to make contact with all companies, particularly if there is a controversial item or where ACSI may oppose the board on a resolution.


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]

Prior to ACSI issuing voting recommendations to members, ACSI attempts to make contact with all companies, particularly if there is a controversial item or where ACSI may oppose the board on a resolution. When ACSI is making a recommendation against, ACSI engages with the company and seeks a response and rationale from the company for the report.


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]


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
91 %
Against (opposing) management recommendations
9 %
Abstentions
0 %
100%

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

100

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]

Through our service provider, ACSI, we engage companies and undertake a series of escalation steps before and after company meetings. The level of escalation recommended by ACSI is dependent upon the nature and materiality of an issue and responsiveness of a company to engagement.

 

Generally, where ACSI recommends a vote in opposition to the board, depending on the materiality, the company may be put onto ACSI's engagement priority list for the following year.

Further escalation can include:

Further engagement with board members and/or chair
Expressing concerns to alternative company representatives (i.e. management, other non-executive directors)
Working collectively with asset managers/other asset owners and holding discussions with other equity or bondholders
Recommending additional votes against management on relevant proposals at general meetings (eg: ACSI's women on boards policy

https://acsi.org.au/wp-content/uploads/2020/02/2019-Voting-Policy-gender-diversity.pdf)

Speaking to regulators, industry bodies and advocating for policy change
Expressing concerns publicly
Encourage our membership and other industry participants to take up more pro-active stance


LEA 20. Shareholder resolutions (Private)


LEA 21. Examples of (proxy) voting activities (Private)


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