ATP, Denmark’s huge labour market supplementary pension fund, is increasingly going its own way when it casts its vote at company general meetings and diverging from the standard advice given by its proxy advisor, according to a new report.

In its 2020 Stewardship Report being published today, ATP revealed that in this year’s annual general meeting (AGM) round at companies it invests in, both at home and abroad, in around 21% of cases the pension fund voted differently from the recommendation of its proxy advisor.

The DKK934bn (€125bn) statutory fund uses ISS for proxy advice, which is the largest such firm internationally, according to the US think tank the Manhattan Institute for Policy Research.

ATP’s proportion of proxy-divergent voting is up from 18% in 2019, according to the previous year’s report.

Jakob Skafte, director of ATP’s ESG team, told IPE: “It’s correct that we are voting against the proxy advisor more than we used to, although that is not a target in itself, and our advisor provides indispensable input in to our process.”

Skafte pointed to several issues within corporate governance that ATP takes a particular stand on, which are considered differently by ISS when making recommendations to its investor clients.

Much of the divergence in voting behaviour comes down to ATP’s disapproval of companies combining the roles of chair of the board and CEO – a frequent occurrence at US companies, Skafte said.

This position has not changed since 2016, he said, but the pension fund has more recently changed its approach in other areas of governance.

“With regard to ‘say on pay’ and auditors, we’ve tightened our approach,” he said.

On the first of these two issues, Skafte said that in recent years ATP had felt that corporate executive pay in several markets is too high and it has been voting accordingly.

“That’s not really a big divergence from the proxy advice in itself, but besides voting against the packages themselves, we have also started voting against the compensation committee. And when we start voting against board election that really changes the game,” he said.

Regarding the second issue Skafte mentioned, ATP said in its new stewardship report that this year it changed its practices for approving auditors – often a standard item on AGM agendas.

Now the pension fund will vote against auditors who have audited a company for more than 15 years, in order to ensure that the auditors are independent of the company’s management and act as the shareholder’s guarantee that the firm’s financial statements are not misleading.

Skafte said it is important for ATP’s stakeholders – who number the entire population and their representatives, given that the ATP scheme covers all workers – to see that the pension fund does not always vote in agreement with the proxy advisor.

“A lot of the stakeholders are interested in the figure as a test of our independence, and they want to make sure we are not asleep at the wheel,” he said.

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